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S'pore's prime property market weakest in world

Prices extend slide in Q3 with 7.9% fall, but decline has slowed from 15.2% in Q2
Tuesday, November 10, 2015 - 05:50
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Singapore is home to the weakest-performing luxury residential market for the seventh consecutive quarter, according to the Knight Frank Prime Global Cities Index that tracks 34 cities worldwide.

Singapore

SINGAPORE is home to the weakest-performing luxury residential market for the seventh consecutive quarter, according to the Knight Frank Prime Global Cities Index that tracks 34 cities worldwide.

Prices of prime homes here fell the most in the third quarter but the rate of decline on a year-on-year basis slowed from 15.2 per cent at the end of the second quarter to 7.9 per cent at the end of the third quarter.

"There is evidence of notable condominium sales transacted at prices that are close to typical market prices for ultra-luxury residential properties, hence we see a slight upwards improvement in the index from last quarter," said Alice Tan, head of consultancy and research at Knight Frank Singapore.

"However, such transactions remain low as interest in high-end residential properties continues to remain muted due to ABSD (additional buyer's stamp duty) and uncertain market conditions."

The continued price decline of Singapore's luxury homes tracked by Knight Frank was in tandem with the drop in prices for non-landed residential units in the Core Central Region (CCR), where prices fell for the 10th consecutive quarter in the Urban Redevelopment Authority's third-quarter statistics.

As at the end of the third quarter, Knight Frank's Prime Global Cities Index that track luxury home prices (demarcated as the top 5 per cent of the housing market in each city) stood at 34.1 per cent above its low in Q1 2009, but its year-on-year growth slowed significantly from 7 per cent two years ago to 1.9 per cent.

Around 73 per cent of cities recorded positive annual price growth in the year to September but two years ago, this proportion was closer to 91 per cent.

Bucking up the Prime Global Cities Index were cities like Vancouver, Sydney and Shanghai, which recorded double-digit annual price increases.

Vancouver saw a 20.4 per cent jump from a year ago in the prices of luxury homes at end-September amid tight supply. The number of homes for sale contracted by 32 per cent year on year while local demand strengthened alongside foreign interest.

Sydney and Shanghai also recorded price growth of 13.7 per cent and 10.7 per cent year on year respectively. Sydney's market performance was attributable to the weak Aussie dollar, an undersupply of new homes and a strong local economy, while demand in Shanghai enjoyed a lift from the reversal of strict housing policies and the relaxation of fiscal measures on tax and interest rates.

Knight Frank's analysis by region shows Australasia leading the way with average annual price growth of 11.6 per cent, followed by North America at 8.5 per cent, and Europe at 0.8 per cent.

The property consultancy firm noted that as quantitative easing unwinds and a US Fed rate hike looms nearer, prime assets will remain on the radar of investors and high net worth individuals. "The big question mark surrounds not Greece and the Eurozone but the slowdown in the Chinese economy," Knight Frank says in its report.

Read the full research report at BTInvest (btinvest.com.sg/property)

 

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