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Private home prices slip 0.1% q-o-q in Q4, rise 7.9% in 2018: URA flash estimate

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Prices of landed homes led the slowdown, falling by 1.8 per cent, reversing a 2.3 per cent rise in the third quarter.

PRIVATE home prices eased 0.1 per cent in the fourth quarter of 2018 over the preceding three months, according to a flash estimate provided by the Urban Redevelopment Authority (URA) on Wednesday morning.

However, for 2018 as a whole, the private residential property price index increased 7.9 per cent, outpacing the 1.1 per cent increase chalked up in 2017. Cushman & Wakefield estimates that property prices could have actually increased by more than 10 per cent if not for the July cooling measures, which have curtailed market exuberance.

The 0.1 per cent decrease in the fourth quarter comes after a quarter-on-quarter increase of 0.5 per cent in Q3 of 2018.

In the fourth quarter, prices of landed homes fell 1.8 per cent over the previous quarter, following a 2.3 per cent increase in the third quarter.

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Prices of non-landed private homes inched up 0.3 per cent in the fourth quarter, after remaining flat in the previous quarter.

Huttons Asia research head Lee Sze Teck noted that the decrease in overall prices in the private residential market appeared to be driven by the landed segment. He said: "We can take heart from the fact that prices in the non-landed segment inched up 0.3 per cent in Q4 2018 after staying flat in Q3 2018 because of the cooling measures. This slight increase in prices is supported by a healthy volume of transactions in the market and should be sustainable."

Giving a breakdown of non-landed private home prices by region in the fourth quarter, the URA said that prices fell by 1.5 per cent in the prime areas or core central region (CCR), versus a 1.3 per cent increase in the previous quarter. Prices in the city fringe or rest of the central region (RCR) increased by 1.8 per cent after a decrease of 1.3 per cent in the previous quarter. Prices in the suburbs or outside the central region (OCR) edged up 0.8 per cent after registering a 0.1 per cent dip in the previous quarter.

For 2018 as a whole, prices in the CCR, RCR and OCR have increased by 6.2 per cent, 7.4 per cent and 9.5 per cent respectively.

Christine Li, senior director and head of research at Cushman & Wakefield noted that the fall in CCR and landed prices in Q4 suggests a stronger cooling effect on properties which have a higher price quantum.

She said: "Investors for high-end homes are expected to adopt a wait-and-see approach, as uncertainties in the global financial market have dampened the sentiment somewhat. Recent cooling measures have also made it less attractive for foreigners to invest in Singapore residential in the near term."

She expects that the residential market will continue to be dominated by new sales rather than resale, as developers will need to launch their projects given restrictions such as the five-year ABSD deadline as well as incoming supply from the slew of en bloc sales.

She added: "Developers are expected to keep launch prices steady to retain their profit margins due to rising land prices. As such, this wave of new launches should provide support for the private property prices, particularly in the non-landed segment."

Huttons Asia's Mr Lee said: "For 2019, buyers will have plenty of options in the market as up to 19,000 units may be ready for launch. Out of these, it is estimated that 20 per cent are in the CCR, 30 per cent in the RCR and the rest in OCR."

Some of these projects include Fourth Avenue Residences, RV Altitude, One Meyer, 35 Gilstead and Fyve Derbyshire. He expects that sales of new launches could range from 9,500 to 11,000 units this year, while prices may increase up to 5 per cent. 

The flash estimates are compiled based on transaction prices given in contracts submitted for stamp duty payment and data on units sold by developers up until mid-December. The statistics will be updated on Jan 25 when the URA releases its full set of real estate statistics for the fourth quarter of 2018.