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THE private housing market is close to its trough, say property consultants on Monday, given that the 0.3 per cent fall in the official benchmark price index in the second quarter is the smallest of the 15 quarters since the peak in Q3 2013.
They expect the Urban Redevelopment Authority's overall private home price index to start increasing next year, as projects on sites bought at high land prices come to the market.
Wong Xian Yang, OrangeTee head of research and consultancy, said that the index could potentially bottom out in Q4, "as increasing demand would support current pricing levels".
Ismail Gafoor, PropNex Realty chief executive, and Tricia Song, Colliers International's Singapore research head, believe that the index would start rising probably from the first quarter of next year.
Mr Ismail expects China Construction to launch its 99-year leasehold private condo project in West Coast Vale in Q1; it clinched the site at a state tender in February this year. Its winning bid of S$592 per square foot per plot ratio was 7.3 per cent higher than what EL Development had paid for the next-door Parc Riviera site in August 2015.
"This will kickstart other launches on sites with high land prices including the Toh Tuck plot . . ." said Mr Ismail.
Ms Song said that a brightening economic outlook as well as a decline in completion of new private homes would also support price increases.
The quarter-on-quarter drop of 0.3 per cent in URA's overall private home price index, based on its Q2 flash estimate released on Monday, follows a 0.4 per cent decline in the index in Q1.
OrangeTee's Mr Wong said: "The lacklustre rental market, cooling measures and global economic uncertainties are being balanced out by improving buying demand and sentiment. Singapore property prices, having been on a downtrend for over three and a half years, are looking more attractive vis-a-vis regional markets . . ."
Property consultants polled by BT predict a decline of up to 2 per cent for the whole of 2017. Last year's drop was 3.1 per cent.
Desmond Sim, CBRE Research head of Singapore and South-East Asia, expects the index change to "hover between -2 per cent and 0 per cent" for the year.
"The market is heading for a trough, with the cooling measures expected to stay put. While private home sales volumes are expected to remain healthy, the price index is expected to flatline, while the affordability in terms of absolute price quantum is expected to remain the key driver for sales volume - given the current muted market sentiment amid soft economic growth, and policy conditions."
The TDSR (total debt servicing ratio) framework is still in place, he added.
Industry players noted the Monetary Authority of Singapore's comments last week that the "calibrated adjustments" in March to the seller's stamp duty and TDSR do not signal the start of an unwinding of the property cooling measures.
JLL national director Ong Teck Hui said that the MAS statement was "not expected to have a detrimental effect on the residential market because demand was already on the upswing before the tweaks were announced in March 2017" - driven by more attractive prices and a perception that the market is closer to the bottom.
"The MAS statement, however, would temper unrealistic expectations of some buyers so that they will not be carried away by exuberance and be more measured in their purchasing decisions," he added.
Eugene Lim, ERA Realty Network key executive officer, said that buyers seem to have already accepted the cooling measures as the norm, resulting in "very positive" buying sentiment.
He highlighted that total private home sales in primary and secondary markets (excluding collective sales and executive condo units) in the first half of this year was estimated at 11,484 units, up 55.6 per cent year on year. He predicts the full-year number would come in at 20,000 to 22,000 - higher than last year's total of 16,378.
Based on its Q2 flash estimate, URA's overall private home price index has slipped 11.8 per cent from the recent peak in Q3 2013.
URA's data also showed that prices of non-landed private residential properties in the Core Central Region (CCR) or prime areas fell by 0.9 per cent in Q2, after easing 0.4 per cent in Q1. Colliers' Ms Song attributes the Q2 drop to lower prices transacted in selected projects as their developers dangled discounts to clear inventory.
Mr Ismail of PropNex said that although CCR properties were now more affordable than in the past two or three years, buyers were still price sensitive and cautious. "Sellers and developers therefore have to be realistic about their pricing. The presence of existing unsold stock in new projects does present buyers with many options."
Mr Ismail expects prices in CCR to drop by 3 per cent this year.
In the city fringe or Rest of Central Region (RCR), prices rose 0.5 per cent, after registering an increase of 0.3 per cent in the previous quarter.
CBRE's Mr Sim attributes the strengthening partly to the launch of projects such as Artra along with continued sales in Commonwealth Towers and Principal Garden. "The proximity to the CCR for the mentioned projects has . . . helped to boost the price index for the whole RCR market."
Prices in the suburbs or Outside Central Region (OCR) retreated 0.4 per cent, after inching up 0.1 per cent in Q1.
In the landed housing segment, prices fell 0.4 per cent in Q2, after sliding 1.8 per cent in Q1.
"Cumulatively," said JLL's Mr Ong, "the landed index has fallen a significant 16 per cent over 15 quarters. Buyers are finding landed prices more attractive and this has led to 527 units transacted (based on caveats) in Q2 this year, 56.8 per cent higher than Q1 2017 and the highest quarterly landed sales volume since Q4 2012.
"The landed market may well be on the road to bottoming if buying interest is sustained."
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