Q1 private home prices fall 1%, less than initially estimated

But observers say extended circuit breaker period will put more downward pressure on the market

Developers moved 2,149 new homes, excluding executive condominiums, in the first three months of this year, down 12 per cent quarter on quarter, but up 16.9 per cent from March last year.
Developers moved 2,149 new homes, excluding executive condominiums, in the first three months of this year, down 12 per cent quarter on quarter, but up 16.9 per cent from March last year. ST PHOTO: LIM YAOHUI

Private home prices fell less than initially estimated in the first quarter, but the extended circuit breaker period will put more downward pressure on the market, said observers.

They point to the increased job losses and other economic uncertainties amid the lockdown.

Mr Desmond Sim, CBRE's head of research for South-east Asia, predicts prices will correct by 5 per cent to 8 per cent this year.

"Softer economic sentiments may hold back buyers while we could see developers with weaker holding power offering more competitive pricing to move units," he added.

Ms Christine Sun, head of research and consultancy at OrangeTee & Tie, was more optimistic, tipping that prices could decline by up to 4 per cent over the full year, although that forecast may be revised if the circuit breaker extends beyond June 1.

"Although the long-term effects of the coronavirus pandemic remain uncertain, the bright side is that Singapore's property market has always recovered after every economic crisis," she noted.

"Buying activities could pick up faster than other downturns, given the pent-up demand from many weeks of home isolation."

It is still too early into the lockdown to glean much from the data, but numbers out yesterday from the Urban Redevelopment Authority (URA) perhaps point to the direction ahead.

They showed that private home prices dropped 1 per cent from the last quarter of 2019 to the first three months of this year, slightly less than the 1.2 per cent estimated.

The fall comes after three consecutive quarter-on-quarter gains.

Prices eased 2.7 per cent last year, a "soft landing" after the July 2018 cooling measures, but were still up 2.4 per cent as at March 31, compared with March last year.

The final URA data for the first quarter showed that overall prices of non-landed property declined 1 per cent, worse than the 0.3 per cent drop in the previous quarter.

Landed homes were down 0.9 per cent, reversing a 3.6 per cent increase in the previous quarter.

Prices for non-landed homes in the core central region fell 2.2 per cent, following the 2.8 per cent drop in the previous quarter.

Units in the city fringe or rest of the central region dipped 0.5 per cent, compared with a 1.3 per cent fall in the last three months of 2019.

It was much the same in the suburbs or outside the central region, where home prices declined 0.4 per cent compared with the 2.8 per cent increase in the previous quarter.

Stay-home measures, restrictions on the arrival of foreign visitors and the closure of sales galleries will further dampen new home sales, which began to fall in the first quarter.

Resale and subsale transactions in the first three months of the year stood at 2,120 units, a 12.9 per cent drop from the previous quarter, but 11.3 per cent higher year on year.

Developers moved 2,149 new homes - excluding executive condominiums (ECs) - down 12 per cent quarter on quarter but up 16.9 per cent from March last year. They launched about 6 per cent fewer units - 2,093 against 2,226 in the previous quarter.

"We believe the take-up has yet to reflect the full impact of Covid-19 as the circuit breaker measures kicked in after the quarter end, and most of the transactions had occurred in January and February," said Ms Tricia Song, head of research for Singapore at Colliers International.

She added that developer sales may fall to 8,000 units this year compared with 9,912 last year, assuming some rebound due to pent-up demand before the year end.

Mr Sim sees developer sales dropping to between 4,000 to 5,000 units (excluding ECs), especially if the pandemic is prolonged.

New units for release will continue to slow as some developers delay project launches amid the closure of show galleries, he added.

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A version of this article appeared in the print edition of The Straits Times on April 25, 2020, with the headline Q1 private home prices fall 1%, less than initially estimated. Subscribe