2014 MUST have felt like a recession year for property players, with sales of private condos plunging to a fresh low since the global financial crisis in 2008 and overall prices of all private residential properties marking their first annual fall. INFOGRAPHIC: Negative territory
A government-engineered slowdown of the property market had led prices of private landed and non-landed homes to sag 4 per cent for the full year, with the fourth quarter down 1.1 per cent from the preceding quarter.
Q4 data from the Urban Redevelopment Authority (URA) shows that the drag on the overall private residential price index came from both landed and non-landed (private condos) categories.
Prices of landed homes fell 5.3 per cent over the course of last year as these properties become even less affordable given the lending curbs while prices of non-landed private homes slipped 3.5 per cent. At the same time, sales of private condos dived 44 per cent from 2013's level to 12,723, of which 2,635 were sold in the last quarter.
Chia Siew Chuin, director of research and advisory at Colliers International, said that the broad-based declines in prices point to "the widespread effectiveness of the multiple dosages of cooling measures, particularly, the strict financing curbs of the total debt servicing ratio (TDSR)".
"Various headwinds are expected to keep a lid on home buying demand in 2015," she said, citing a surge in new home completions, rising interest rates, and a lacklustre leasing market.
On a quarter-on-quarter basis, prices of landed homes declined 1.3 per cent in Q4 while non-landed private homes fell one per cent.
It turns out that city-fringe private condos in the Rest of Central Region (RCR) suffered bigger price declines than those in the Core Central Region (CCR). RCR prices fell 1.4 per cent in Q4, followed by CCR, down 0.9 per cent; and Outside Central Region (OCR), down 0.8 per cent.
These translated to full-year declines of 5.3 per cent, 4.1 per cent and 2.2 per cent respectively. Suburban condo prices in OCR held up better due mainly to a wider demand base stemming from their affordability, consultants say.
Still, consultants do not expect a hard-landing for prices this year.
Colliers expects overall private home prices to slip a "steeper but measured" 5-8 per cent this year. Also assuming that cooling measures are not lifted, Knight Frank is projecting a 4-6 per cent drop in overall private home prices this year.
"For OCR, we expect the price fall of mass market homes to accelerate in the first quarter, with high unsold inventory and anticipated weakness in the HDB resale market affecting upgraders' demand for private residential properties," said Knight Frank head of research and consultancy Alice Tan.
Knight Frank also expects developers' sales this quarter to range from 2,000 to 2,500 units. CBRE Research has pegged its full year forecast at 7,500-8,000 units.
Developers sold 1,376 new condo units in Q4, taking their total sales for the year to 7,316 - half of what they sold in 2013. Resales of private condos in the secondary market, which have contracted since 2010, stood at 4,860 units in 2014 - below 2008's level and marking a 27 per cent year-on-year fall.
JLL national research director Ong Teck Hui pointed out that 2014 ended with 19,941 units completed (such as in d'Leedon, Seastrand, Parc Vera, Terrasse, and The Miltonia), which is 52 per cent more than the 13,150 in 2013.
This has led to a rise in the vacancy rate of completed private residential units (excluding ECs) to 7.8 per cent at end-Q4, from 7.1 per cent at end-Q3.
"If it trends towards 10 per cent," Mr Ong said, "it would reach the high vacancies recorded during the 2004-2005 period when rents were depressed. The increased supply of completed units is exacerbating the softening in the leasing market, with the rental index falling by one per cent in Q4 and by 3 per cent for the whole year."
For private non-landed homes, URA data shows rents falling 2.6 per cent last year, with the biggest drop of 3.7 per cent in the CCR, where higher rents tend to be out-of-reach for tenants with tighter housing budgets.
Ms Chia said: "The increasingly competitive leasing market could prompt landlords, particularly those with older developments or developments in less attractive locations, to lower their rent expectations in order to secure tenants."