Private home, resale HDB prices continue slide in Q2

Singapore

PRICES of both private and public housing continued their slide in the second quarter of this year, albeit at smaller magnitudes compared to a quarter ago. Still, clear signals of a bottoming out, particularly in the private market, remain elusive, consultants pointed out.

The second-quarter flash index of the Urban Redevelopment Authority (URA) showed an overall 0.9 per cent drop for private homes after a one per cent decline in the first quarter; the flash index of the Housing & Development Board (HDB) showed HDB resale prices slipping 0.4 per cent in the second quarter, after a one per cent drop in the first quarter.

This marked a seventh straight quarter of decline for private homes and an eighth for HDB resale flats. But the consensus among consultants is that it is too early to conclude that prices have stabilised.

"Psychologically, buyers might be reluctant to make a purchase now, given that the going price for a newly acquired property could be lower in six to 12 months' time," said Chia Siew Chuin, Colliers International director of research and advisory.

With the large number of unsold units in launched and unlaunched projects, buyers being highly selective and developers pacing out their launches, there will be more downward pressures in prices and transactions, she added.

So far, the overall 6.7 per cent price correction for private homes from the peak over the past seven quarters is still fairly moderate and signals a "soft landing" in her view.

The price falls in non-landed private homes were seen across all regions in the second quarter. In Core Central Region (CCR), prices slipped 0.5 per cent, higher than the 0.4 per cent decline in the previous quarter.

Prices of non-landed private homes in city fringes or Rest of Central Region (RCR) fell 0.5 per cent, smaller than the 1.7 per cent fall in the previous quarter. In the suburban areas or Outside Central Region (OCR), prices slipped 1.2 per cent, after a 1.1 per cent decline in the first quarter.

Desmond Sim, CBRE head of research for Singapore and South-east Asia, believes that the price declines across all regions "presents the state with yet another piece of evidence and data to possibly consider a review of the measures".

"Should this downward trend continue for the next few quarters, expectations for a review will be higher," he said.

Some consultants believe that value-hunting by buyers in the CCR and RCR could have cushioned the price falls in these regions in the second quarter, and more opportunitistic pick-ups of high-end properties may be seen in the second half of this year.

With the OCR private home prices falling more sharply than HDB resale prices, the widening price gap between mass-market condos and HDB resale flats would have discouraged many HDB owners from upgrading to private homes and contributed to the drag on OCR prices, said JLL national research director Ong Teck Hui. Over the last one year, 55 per cent of buyers of private homes in OCR had HDB addresses, he estimated.

His compilation shows that 2,912 caveats were lodged for non-landed private homes in the second quarter, 49 per cent higher than in the first quarter, which suggests that there is a steady number of buyers and sellers who are willing to transact at consecutively lower prices.

ERA Realty key executive officer Eugene Lim noticed that buyers prefer properties priced below S$1.5 million than those in the higher price bands due to the cap on financing under the total debt servicing ratio (TDSR) as well as the impact of having to pay the additional buyer's stamp duty (ABSD).

"If we continue to see the rate of price decrease slow down for the subsequent quarters of the year, it would be a clear indication of bottoming out and the market has found its footing," Mr Lim added.

URA's flash estimates are compiled based on transaction prices stated in contracts submitted for stamp duty payment and a survey on developers' sales during the first 10 weeks of the quarter. The data will be updated four weeks later when URA releases the full real estate statistics for the second quarter.

For public housing, there are greater signs of stabilising prices in resale flats in the second quarter where the fall was the smallest in the past eight quarters. But market watchers are waiting to see if the trend continues in subsequent quarters.

HDB said on Wednesday that as the HDB resale market stabilises, it will further taper the Build-To-Order (BTO) flat supply this year to 15,000 flats. This supply will be supplemented with over 9,000 balance flats under the Sale of Balance Flats (SBF) exercises this year.

In the first half of this year, HDB had offered 8,039 flats in two BTO exercises and 5,387 flats in an SBF exercise. It will roll out another 4,860 BTO flats in Bidadari and Punggol Northshore by September. About 4,000 flats will be offered in a concurrent SBF exercise.

ERA's Mr Lim noted that a potential increase in the income ceiling for new HDB flats could possibly lead to higher demand for BTO flats. But if the supply of new BTO flats is trimmed, this will have a positive spillover effect on demand for resale flats.

When this happens, there may be upward pressure on resale prices, he said. "However, we do not expect any significant price increase as the resale HDB market is largely a buyers' market and buyers are still affected by the mortgage servicing ratio."

Consultants are expecting HDB resale prices to fall by up to 5 per cent and private home prices to slip by up to 6 per cent this year.