Things looking up for property market

Overall private home prices saw the slowest rate of decline last year - down 3.1 per cent - amid a three-year losing streak. Analysts expect prices to continue to fall this year by about 2 per cent to 3 per cent.
Overall private home prices saw the slowest rate of decline last year - down 3.1 per cent - amid a three-year losing streak. Analysts expect prices to continue to fall this year by about 2 per cent to 3 per cent.ST PHOTO: LIM YAOHUI

Declines in private home prices and rents slowed in Q4, while sales of new homes rose last year

The property market appears to be finally clawing its way out of what has been a lengthy rut.

Declines in private home prices and rents slowed in the fourth quarter, and sales of new units picked up.

The office and retail space segments, although still challenging, also offered some bright spots.

While the numbers do not warrant popping the champagne, they point to improving market confidence.

SLP International executive director Nicholas Mak told The Straits Times: "Things are less gloomy now compared with a few years ago, when there was a huge supply overhang. The fear was that prices and rents may collapse; that didn't happen."

  • 7,972 

  • Number of new units sold last year, excluding executive condos.

The optimism stems from data released by the Urban Redevelopment Authority (URA) yesterday. It showed that overall private home prices saw the slowest rate of decline last year amid a three-year losing streak - down 3.1 per cent compared with drops of 3.7 per cent in 2015 and 4 per cent in 2014.

There was also improvement at the end of last year, with overall prices dipping 0.5 per cent from the third quarter to the fourth, much better than the 1.5 per cent drop from the second to the third quarter.

Price declines have been the norm since the third quarter of 2013, after cooling measures tamed property demand and sent values of private homes down by about 11 per cent.

The softer prices wooed buyers back last year, boosting new home sales to 7,972 units (excluding executive condominiums), up from the 7,440 shifted in 2015.

"With sales increasing, coupled with a declining number of unsold private residential units, and the moderation in price decline, we anticipate home prices are bottoming out in 2017," said Dr Lee Nai Jia, head of South-east Asia research at Edmund Tie and Company.

Analysts expect prices to continue to fall this year by about 2 per cent to 3 per cent - music to buyers' ears.

Financial consultant Sanjay Ashok Wadhwani, who is looking for an apartment in the East Coast area, is putting his buying plans on hold.

"Interest rates are creeping up, the economy is not growing as quickly, so I think there is room for prices to come down. It is safer to wait a bit more," he told The Straits Times.

The core central region was the best performing sub-market late last year, booking a marginal price increase of 0.1 per cent from the third to the fourth quarter.

Non-landed home prices continued to ease in the city fringe, down 2 per cent in the same period. They dipped 0.6 per cent in the suburbs.

Landed property bucked the downtrend, posting a 0.8 per cent price increase in the fourth quarter.

While overall private home prices have been falling in recent years, analysts do not think the Government will tweak cooling measures soon.

"I don't think they will do it this year as prices and transactions have been quite stable. The measures have worked," noted PropNex Realty chief executive Ismail Gafoor.

Mr Mak added: "It is unlikely they will do that in the first half, unless there is a bad recession or interest rates rise significantly enough to act like a natural cooling measure."

Overall rents of private homes dipped by 1 per cent from the third to fourth quarter, slower than the 1.2 per cent drop from the second to third. The URA said the vacancy rate of completed private homes improved to 8.4 per cent as at Dec 31, from 8.7 per cent at end-September.

A version of this article appeared in the print edition of The Straits Times on January 27, 2017, with the headline 'Things looking up for property market'. Print Edition | Subscribe