“2Q17 data shows that the residential property market is clearly improving” Mr Ong Teck Hui, National Director, Research & Consultancy
Price index closer to bottom
It is significant that the overall index for private homes eased only a marginal -0.1 per cent in 2Q17, an improvement from the -0.3 per cent posted during the flash estimates and also the smallest decline over fifteen quarters. It is an indication that the index is closer to the bottom. Improvements are seen in all the sub-indices as tabulated below:
| 1Q17 | Flash Estimates 2Q17 | Actual 2Q17 | |
| All Residential | -0.4 | -0.3 | -0.1 |
| Landed property | -1.8 | -0.4 | -0.3 |
| Non-landed property | 0.0 | -0.3 | -0.1 |
| CCR | -0.4 | -0.9 | -0.5 |
| RCR | +0.3 | +0.5 | +0.6 |
| OCR | 0.1 | -0.4 | -0.3 |
Source: URA/JLL Research
The data shows that overall, prices are moderating further although the performances remain patchy, with the landed index decline moderating significantly, the RCR index continued to rise for another quarter while the indices for CCR and OCR softened slightly.
Strongest transaction volume in four years
In 2Q17, the total number of private homes sold in both the primary and secondary markets was 6,905 units, the highest quarterly sales since 2Q13 when 6,945 units were transacted before the TDSR was imposed. In the first half of 2017, the transaction volume in both the primary and secondary markets was 12,107 units, 63.7 per cent higher than in the first half of 2016. Driven by the perception that the market is close to the bottom, as well as prices having fallen to more attractive levels, buyers have been flocking back to the market. This trend is expected to continue into the second half of the year with demand remaining upbeat as buyers try to catch the market before it turns around. Our forecast for the full year’s total transaction volume is 23,000 to 25,000 units, surpassing the 22,719 units in 2013.
Rental decline moderating
The overall rental index eased -0.2 per cent in 2Q17 following a -0.9 per cent drop in 1Q17 and is also the smallest quarterly decline over 15 quarters of downtrend. Most of the sub-indices also display the same trend so the data points towards a moderation in rental decline. The peak of the supply from new completions was in 2016 when 20,803 units were completed and vacancy rates hit a high of 8.9 per cent in the middle of the year. New completions have moderated to 8,134 units in the first half of 2017 with vacancy registering a lower 8.1 per cent as at 2Q17. Another 8,410 units are expected to be completed in 2H17 (based on URA data), followed by 8,417 units in 2018. As the leasing market is still over-supplied, a turnaround is expected only in 2018, when supply moderates significantly and expected economic improvement lifts demand.
Unsold stock at more manageable level
The stock of unsold private homes comprising of both completed and uncompleted private residential units unsold has declined to 16,929 as at 2Q17, from the most recent high of 40,430 at end 2011. Of significance is the unsold stock of 5,956 units in OCR which appears to be a low inventory level compared to recent take up rate (comprising of completed and uncompleted private residential units sold). The take up in 1H17 in the OCR primary market was 3,732 units. Assuming a doubling to 7,464 units for the full year, this figure exceeds the unsold stock of 5,956 units. This phenomenon could contribute to prices stabilizing sooner leading to an eventual turn around.
