PDF versionSingapore, - According to the Urban Redevelopment Authority’s (URA) flash estimates, overall prices
in the private residential property market have witnessed its first decline after about four years of
steady expansion. Specifically, flash estimate figures indicate that overall price growth have declined
by 1.8% quarter-on-quarter (qoq) in 3Q 2008. The drop in prices came not as a surprise as US
financial problems and global economic slowdown had already weighed down investment sentiments
and caused local transaction volume of private homes to diminish since 2H 2007. As the US financial
and economic problems persisted, it was only a matter of time before overall private home prices
started to fall as well.
All non-landed market segments, except for the mass-market segment (Outside Central Region), saw prices easing in the third quarter. For the prime market segment (Core Central Region), the tapering of prices since the previous quarter saw growth decline by 2% qoq in 3Q 2008. Private home prices in the mid-tier (Rest of Central Region) recorded a slightly faster fall of 2.1% qoq, after achieving 0.7% qoq expansion the preceding quarter. The larger price fall in the high-end and mid-tier segments are partly due to the robust price growth that these two segments had enjoyed in the past three years, where prices of some properties had reached record heights. By comparison, average prices in the mass-market private home segment had a slower start and increased by a marginal 0.1% in 3Q 2008. Movement of average home prices of mass-market condominiums was mixed with both increases and declines. Despite the weaker market environment, the median transacted prices of units in Varsity Park Condominium, located at West Coast Road, still experienced a slight 2.5% qoq climb in median prices at about S$754 psf.
Singapore’s public housing market is still experiencing healthy growth this quarter. According to HDB’s
flash estimate, average HDB resale home prices still achieved a relatively impressive growth of 4.2%
in 3Q 2008. This could be attributed to the healthy demand for resale HDB flats as a result of the increase in the number of permanent residents in Singapore and the demand from newly formed
families. The more cautious mood among these newly formed families could have caused some of
them to purchase HDB flats instead of private properties.
Outlook
Going forward, it is anticipated that the price decline is likely to persist. Essentially, whatever price
gain achieved in the first half of this year would be given up in 2H 2008, resulting in a flat price gain for
the whole of 2008. The mass-market segment’s weak price growth of 0.1% in 3Q 2008 could be the
prelude to a decline in the following quarter. In 2009, it is also expected that the slackening of prices
this year could result in a challenging year ahead for Singapore’s private residential property market.
On the other hand, the strength in the HDB resale flat market is expected to continue for at least
another 6 months. This could result in a 12% to 17% increase in the average HDB resale home price
for the whole of 2008.
Nicholas Mak, Director of Consultancy & Research Department, Knight Frank, +65 6228 6821
Knight Frank and its New York-based partner, Newmark Knight Frank, operate over 140 offices in
established and emerging property markets on five continents. Last year, the companies handled
transactions valued at over $41billion with annual revenues of over $545 million.
For more information about Knight Frank, please visit www.knightfrank.com