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Private home prices up 1.5% in Q2; 2019 could end in positive territory

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Private home prices rose 1.5 per cent quarter-on-quarter in Q2 in the first increase since last July's cooling measures, and analysts suggest that private residential prices for 2019 could grow slightly year-on-year on the back of new launches.

Singapore

PRIVATE home prices rose 1.5 per cent quarter-on-quarter in Q2 in the first increase since last July's cooling measures, and analysts suggest that private residential prices for 2019 could grow slightly year-on-year on the back of new launches.

The 1.5 per cent increase, higher than the 1.3 per cent cited in the flash estimate of the Urban Redevelopment Authority (URA), was led by non-landed properties in the prime and city fringe districts.

After a 0.7 per cent decline in the first quarter, overall private home values in the first half of 2019 have risen 0.8 per cent. For Q2, private home prices rose 1.2 per cent year-on-year.

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In the core central region (CCR), high-value transactions at luxury projects such as Boulevard 88 and 3 Cuscaden mainly contributed to the price increases in that region, said JLL's senior director (research & consultancy) Ong Teck Hui.

In the rest of the central region (RCR), successful launches such as Amber Park, Sky Everton, The Tre Ver and Parc Esta were singled out by analysts.

Some analysts also noted that interest from foreign buyers seems to have held up after the cooling measures, and that the protests in Hong Kong and Brexit in the United Kingdom could also be prompting high-net-worth buyers to turn their focus to markets such as Singapore.

According to the data released by the URA, prices of landed properties dipped by 0.1 per cent in the second quarter, compared to a 1.1 per cent increase in the previous quarter.

However, prices of non-landed properties in the CCR were up 2.3 per cent in Q2, versus a 3 per cent decline in the previous quarter.

Prices of non-landed homes in the RCR rose by 3.5 per cent, in comparison to a 0.7 per cent decrease in the previous quarter. Meanwhile, prices of non-landed properties in outside the central region (OCR) edged up 0.4 per cent, after a 0.2 per cent increase in the previous quarter.

Catherine He, associate director of research at CBRE, expects the property price index to remain stable or show moderate growth for the rest of this year.

OrangeTee & Tie projects prices to grow marginally by 1 to 3 per cent for the year as a whole. Its head of research and consultancy Christine Sun said: "Given the sustained interest for private properties, we may expect private home prices to trend further up for the rest of 2019."

List Sotheby's International Realty sees overall private home prices registering an increase of 3 to 4 per cent year-on-year by Q4, while ERA Realty estimates that the private residential price index will end the year 1.5 to 2.5 per cent higher than the previous year, led by prices of private non-landed new launches.

However, Colliers International's head of research (Singapore) Tricia Song does not see Q2's price growth as sustainable. She cites value-conscious buyers, macro-economic headwinds and trade tensions as factors which have cast a shadow on Singapore's economic outlook.

"For 2019, Colliers Research is expecting prices to rise by 1 per cent, barring an economic downturn, lower than the 7.9 per cent growth in 2018.

"This means prices would likely remain flat in the next two quarters, owing to an ample launch pipeline, which should keep prices stable," she said.

Among the list of potential upcoming launches are Jervois Prive, Avenue South Residence, Amber Sea and Parc Clematis.

OrangeTee & Tie's Ms Sun noted the rise in non-landed private home purchases by foreign buyers in Q2, with the number of units sold climbing 46.2 per cent from 173 units in Q1 to 253 units in Q2.

Suggesting that stable economies may have benefited from the US-China trade tensions and regional geopolitical friction, she said: "Some investors may have started to rebalance their mix of assets - potentially transferring funds from more volatile capital markets to safer investments like property. This may explain why some foreign buyers have streamed steadily back into our property market recently, and many luxury homes have been snapped up by well-heeled investors."

Cushman & Wakefield's head of research (Singapore and South-east Asia) Christine Li pointed out that interest among overseas buyers, particularly in the high-end segment, appears to have held up - even with the cooling measures.

"In addition, the recent turmoil in Hong Kong and the United Kingdom due to the Hong Kong protests and Brexit could bode well for the residential market here, as high-net-worth-individuals eye other wealth centres such as Singapore to preserve their wealth."

Other factors seen as underpinning demand for the housing market include the more favourable interest rate environment, pent-up domestic demand and cash-rich en bloc recipients in Singapore looking for a replacement home.

URA's data also showed that rents of private homes increased 1.3 per cent in the second quarter, up from 1 per cent in the previous quarter. Meanwhile, the vacancy rate edged up 0.1 percentage point to 6.4 per cent.

During the second quarter, developers launched 2,502 uncompleted private homes (excluding executive condominiums or ECs) for sale, fewer than the 2,989 units launched in Q1. In the quarter under review, they sold 2,350 homes, more than the 1,838 units sold in the previous quarter.

No EC units were launched for sale in Q2, but developers sold 10 units from previous launches over the period. The 820-unit Piermont Grand, however, is expected to be launched in the third quarter of this year.

There were 2,371 resale transactions in Q2, which made up nearly half of all sale transactions. In comparison, 1,858 resale units were transacted in the previous quarter.

As at the end of the second quarter, there was a total supply of 50,674 uncompleted private homes (excluding ECs) in the pipeline with planning approvals. Of this, 33,673 units remained unsold at the end of the second quarter. The supply of EC units in the pipeline stood at 3,022, of which 1,865 EC units remained unsold.

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