Apparently, investors and home owners alike continue to be ruffled by the global economic uncertainties and the soaring inflation which are short-changing exporters who transact in US dollars. The threat of insolvency is knocking on every exporter’s door, if the green back does not rebound quickly. However, economists are optimistic that the property market will not crash-land as the two upcoming Integrated Resorts (IRs) will provide the necessary support in terms of the demand for quality housing, and attracting related investments.

After a spectacular 31% growth in 2007, Singapore's private home market appears to be fizzling out. Private home prices rose a mere 0.4% in the second quarter (Q2 2008), the slowest increase in four years. The Q2 growth was also much slower than the 3.7% increase achieved in the previous three months.

• Prices of both apartments and condominiums rose 0.1% in Q2 2008.
• Prices of landed properties rose 0.6% in the same period, compared with 3.9% in the previous quarter. Prices of detached, semi-detached and terrace houses rose 0.7%, 0.5% and 0.7% respectively.

The price increases of non-landed private residential properties in the respective geographic sectors are as follows:

In this respect, the following developments may have some negative impact on home prices in the mid-term of three to six months.

• [B.1.1] New homes launched with cheaper prices

One example is Dakota Residences at Dakota Crescent, a 99-year leasehold project by Ho Bee Investments and NTUC Choice Homes whereby 348 units are being offered at $950 psf compared to the targeted $1,000 to $1,100 psf.

While City Developments' (CDL) Shelford Suites in Shelford Road has also started previews for its 77 units at about $1,600 psf on average lower than the previous target of $1,869 psf and $1,905 psf.

Likewise, CDL’s 724 units, 99 year lease, Livia condo at Pasir Ris was launched for an average price of $650 psf in the second weekend of July 2008. Some analysts said the price was about 10% lower than what CDL would have offered 12 months earlier.

Developers Han Seng Juan and David Loh Kim Kang, soft-launched the 512-unit Kovan Residences at an average price of $850 psf.

• [B.1.2] Record home completion next year may dampen prices

According to recent URA data, about 13,400 new homes are expected to be completed next year, putting downward pressure on sale and rental prices.

One estimate said rents could fall by 5% to 10% next year. And in prime areas such as Orchard and East Coast, the effect could be worst with rents expected to fall by as much as 15%. This is because in East Coast, 3.341 new homes will be completed; while in Orchard, 4,240 new ones will be added.
Suburban areas could be spared because they are mostly owner-occupied.

• [B.1.3] Private home rents dropped marginally but transactions rose

According to URA data on private home rents, there were 193 condo projects with more than 10 new Tenancy Agreements (TAs) signed in Q2 2008, compared with 132 projects in the first three months of this year. This could mean that more TAs were signed in Q2 2008 than the previous quarter – due to lower rental prices.

When compared with Q1 2008, Q2 saw a healthy growth in the number of transactions for condo projects in popular locations. Let’s look at the rental trend from the same period last year.

• In Q2 2007, there were 156 condo projects with at least 10 new TAs signed;
• In Q3 2007, the figure went up to 202 projects with at least 10 new TAs signed.
• In Q4 2007, rental transactions dropped sharply to 107 projects with at least 10 TAs signed, probably due to the widespread rental hike.

However, things have since taken a turn for the better. Since Q1 2008, the number of new TAs signed has improved steadily, reaching 138 projects with at least 10 new TAs signed. In Q2 2008, the number of condo projects with at least 10 new TAs signed within three months grew to 193 condo projects.

This means that the take-up rate for private rental properties remains healthy as Singapore continues to attract foreign talents to work and live here.

801 private homes were sold in June 2008 and 441 units in the preceding month. All in, the total sale of new homes in the first half was 2,311.

However when compared with the same time last year, the first half numbers amounted to just about a quarter of the volume in the same period last year. From the look of things, the full-year sales volume should be around 4,000-5,000 units, less than half the record 14,811 private homes that developers sold in 2007.

At end-June, there were 13,005 private new homes that have been held back from public launches from their developers. This figure is 20.5% higher than the preceding quarter and 68.5% higher than the 7,720 units as at the end of last year.

These units are in projects with the necessary approvals for sale - that is, they have secured sales licence and Building Plan approvals - and include projects under construction as well as those that have received Temporary Occupation Permit.

In addition, there were 3,209 [excluding Executive Condos] units launched but remained unsold at the end of June. The inventory is 40.3% higher than the figure in end-2007.

The figures below show the similar lacklustre performances of the private secondary market as its primary market counterpart.

Prices for prime property are beginning to show signs of weakness especially in prime districts such as Districts 9, 10 and 11.

Outside the prime districts, capital values of freehold and leasehold non-landed resale residential units remained unchanged, averaging $750 psf and $610 psf respectively, holding steady at this level for three consecutive quarters after both sectors registered 7% increases in Q4 last year.

With the threat of inflation and an economic slowdown in the horizon, prices may drop further as developers try to rid of unsold properties by slashing prices. Furthermore, more people who had bought their units under the Deferred Payment Scheme (DPS) might offload their units so as not to overstretch their finances.

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