Q3 officially ushered in the ‘decline phase’ of the property cycle with the overall prices of private homes down by 1.8%. More property consultants are jumping on the bandwagon by saying that prices are going to keep dropping deep into the second half of 2009, in view of the continuing financial turbulence and the global recession, which is still in its infancy. Below shows the performance of the respective geographic areas in Q3:

• In the Core Central Region (CCR), where the posh Orchard Road, Holland and Bukit Timah districts are located, private home prices fell for the second consecutive quarter, from the 0.1% marginal dip in Q2 2008 to the 2% drop in Q3.
  
  
• In the Rest of Central Region (RCR), from Queenstown, Bishan to Marine Parade and Sentosa, private home prices dropped by 2.1%.
  
  
• Private home prices in Outside Central Region (OCR) held steady and actually rose slightly by 0.1% in Q3 2008, after rising 0.9% in Q2 2008.
  
  

[B.1] Developers braving bad time to launch over 2,000 new homes in Q4

A total of 34 residential projects with a total of 2,012 new home units may be launched before year end. The new home units will be located at the following areas:

Table [1] – New home projects to be launched in Q4 2008

Locality	No. of projects	No. of units
Core Central Region	10	1,104
Rest of Central Region	13	718
Outside Central Region	11	730

Source of data – Straits Times

Evidently, developers had already slashed prices to try to bring down unsold inventory. In September, Far East Organisation and Wing Tai managed to sell eight units in Floridian after seven months of drought. But the median sale price of $1,443 psf was 16.8% lower than the January median prices of $1,735 psf.

Similarly, some units at Madison Residences along Bukit Timah Road were sold at median prices of $1,801 psf, or 10% lower than the median price a year ago.

Viva in Thomson Road and Park Infinia in Wee Nam Road achieved $1,555 psf and $1,501 psf - about 5% less than comparable projects early this year.

[B.2] Prices dropped amid lower transactions for luxury condo

While most of the luxury condo which were launched in the 2006/07 periods are still being transacted at above their original launched prices, the sub-sale prices have already come off their peak. Let’s look at some examples.

Prices at The Oceanfront @ Sentosa Cove have eased 26.4% since the third quarter of 2007.

Prices at Scotts Square likewise fell by 3.6% between their peak in Q3 2007, and Q2/Q3 2008.

The drop in prices was muted by the thin transaction volume. There were only about 10 transactions for each project in Q2/Q3 2008.

Statistics by an international consultancy show that prices of luxury apartments in Districts 9, 10 and 11 have fallen by 12% to 13% since early 2008.

Speculators who bought luxury homes under the now-defunct deferred payment scheme (DPS) may hasten their sale before the completion of more new condos next year. After all, historical trend does not weigh in their favour as during the Asian Financial Crisis, the official URA price index fell 40% from Q2 1997 to Q4 1998.

So, for these speculators, the risks of slipping into negative equity escalate each day as more TOP occurs from Q3 2009 onwards.

[B.3] Q3 Primary home sales continue to worry

The overall performance of the new home market in the past nine months has been a faithful reflection of the jitter, confusion and anguish that pervaded the entire financial market. As the financial crisis deepened in October 2008, the new home market bore the full brunt of the negative developments. With the latest round of stock market massacres in late October 2008, investors’ have been paralysed by fear. Many prospective buyers/investors have shelved their housing/investment plans altogether. It is now doubtful that the whole year sale volume would exceed 5,000 new homes.

For the new home market, the prospect looks grim for the next couple of quarters.

Table [2] - Monthly sale figures of new home units launched in the respective months

Month	Total New Home Units Launched but unsold	New units launched in the month	Total New Home Units Sold
Jan 08	2,539	410	320
Feb 08	2,831	343	174
Mar 08	3,186	642	301
Apr 08	3,187	271	274
May 08	3,218	474	441
Jun 08	3,379	1,069	801
Jul 08	3,841	1,322	897
Aug 08	3,754	194	320
Sept 08	4,154	767	376
	Total	5,492	3,904

Source of data – URA

• Performance of Private New Home Sales in Core Central Region (CCR)

Out of the 182 brand new condo projects on sale in the Core Central Region, only 16 projects had some sales. In all, the total new units sold in CCR in September 2008 were 70.  See table below for details.

Table [3] – Performance of private new home sales in CCR in September 2008

	Project Name	Units Launched in the Month	Units Sold in the Month	Lowest Price ($psf)	Highest Price ($psf)	Median Price ($psf)
1	VIVA	19	19	1,470	1,600	1,555
2	Mulberry Tree	32	13	1,076	1,524	1,337
3	Parc Sophia	0	10	1,379	1,601	1,491
4	Madison Residences	12	6	1,734	1,822	1,801
5	Martin No 38	3	4	2,009	2,419	2,177
6	Park Infinia at Wee Nam	0	4	1,399	1,557	1,501
7	Lucida	0	3	1,374	1,501	1,442
8	D'Chateau @ Shelford	31	2	1,216	1,269	1,243
9	Orchard Scotts	0	2	2,509	2,932	2,721
10	Miro	18	1	1,520	1,520	1,520
11	Nassim Park Residences	0	1	3,197	3,197	3,197
12	Sandy Island	11	1	1,940	1,940	1,940
13	The Lincoln Residences	1	1	1,435	1,435	1,435
14	The Tresor	0	1	1,550	1,550	1,550
15	The Wharf Residence	0	1	1,524	1,524	1,524
16	Zenith	0	1	1,534	1,534	1,534

Source of data – URA

Finding – Median prices for new home SOLD in CCR in September dropped by 5.66%

When compared with the median prices of new home sold in January 2008, which was between $742 psf and $3,389 psf, the current median prices of new home sold in September was between $1,243 psf and $3,197 psf; and this represents a drop of 5.66% in median prices.

• Performance of Private New Home Sales in Rest of Central Region (RCR)

Out of the 123 brand new condo projects on sale in the Rest of Central Region, only 20 projects had some sales. In all, the total new units sold in RCR in September 2008 were 224. See table below for details.

Table [4] – Performance of private new home sales in RCR in September 2008

	Project Name	Units Launched in the Month	Units Sold in the Month	Lowest Price ($psf)	Highest Price ($psf)	Median Price ($psf)
1	Concourse Skyline	100	68	1,272	1,871	1,592
2	The Peak @ Balmeg	90	47	854	1,147	1,011
3	Tresalveo	60	41	902	1,045	968
4	Beacon Heights	50	12	825	972	914
5	Silversea	70	11	1,307	1,780	1,400
6	Clover By The Park	0	9	641	796	749
7	Floridian	0	8	1,397	1,540	1,443
8	Reflections	0	8	1,695	2,367	2,086
9	Dakota Residences	0	5	947	1,073	983
10	Jubilee Residence	0	3	910	1,011	941
11	Bellaville	0	2	575	582	578
12	The Aristo @ Amber	0	2	1,301	1,586	1,443
13	Cantiz @ Rambai	0	1	805	805	805
14	Ivory	0	1	883	883	883
15	Kent Residences	0	1	826	826	826
16	One @ Pulasan	0	1	763	763	763
17	The Amarelle	0	1	1,034	1,034	1,034
18	The Verve	0	1	995	995	995
19	Versilia On Haig	0	1	1,239	1,239	1,239
20	Vogx	0	1	788	788	788

Source of data – URA

Finding – Median prices for new home SOLD in RCR in September dropped by 5.56%

When compared with the median prices of new home sold in January 2008, which was between $653 psf and $2,309 psf, the current median prices of new home sold in September was between $578 psf and $2,086 psf; and this represents a drop of 5.56% in median prices.

• Performance of Private New Home Sales in Outside Central Region (OCR)

Out of the 136 brand new condo projects on sale in the Outside Central Region, only 26 projects had some sales. In all, the total new units sold in OCR in September 2008 were 82. See table below for details.

Table [5] – Performance of private new home sales in RCR in September 2008

	Project Name	Units Launched in the Month	Units Sold in the Month	Lowest Price ($psf)	Highest Price ($psf)	Median Price ($psf)
1	Project Name	0	9	646	702	677
2	Livia	0	9	723	943	749
3	The Lakeshore	0	8	901	1,073	947
4	Eastbay	0	7	1,029	1,076	1,036
5	Hillvista	0	7	768	945	909
6	Naturalis	0	6	694	841	738
7	The Quartz	0	4	860	964	940
8	Kovan Residences	0	3	737	861	849
9	3@Sandilands	0	3	438	663	501
10	Charlton Villas	33	3	885	1,068	960
11	Riz Haven	23	3	583	628	605
12	Sovereign @ Simon	0	3	814	990	908
13	The Verte	0	3	714	791	734
14	Waterfront Waves	15	2	774	788	781
15	The Lattiz	0	1	476	476	476
16	Aston Residence	0	1	827	827	827
17	Bayou Residence	0	1	750	750	750
18	Blu Coral	0	1	736	736	736
19	Bluwaters 2	0	1	926	926	926
20	Breeze By The East	0	1	792	792	792
21	Costa Este	0	1	841	841	841
22	D'Casita	0	1	1,259	1,259	1,259
23	East Coast Residences	0	1	753	753	753
24	Palm Galleria	0	1	815	815	815
25	The Amery	0	1	570	570	570
26	The Linear	0	1	479	479	479

Source of data – URA

Finding – Median prices for new home SOLD in OCR in September dropped by 2.6%

When compared with the median prices of new home sold in January 2008, which was between $601 psf and $1,293 psf, the current median prices of new home sold in September was between $476 psf and $1,259; and this represents a drop of 2.6% in median prices.

[B.4] Secondary home market huffed and puffed in Q3

Likewise, secondary sale of private properties has hit a slippery path, with sales volume going down from 1,055 deals in July 2008 to 352 deals in October 2008, with no reprieve in sight. The figures below show the similar lacklustre performances of the private secondary market as its primary market counterpart.

Table [6] – Total Secondary Private Sales of condo/apartments so far in 2008

Month	Sales volume	Month	Sales volume
Jan	1,017	Jun	860
Feb	769	Jul	1,055
Mar	863	Aug	855
Apr	930	Sept	706
May	994	Oct	352

Source of data – SISVRealink

[B.5] Fewer sub-sales and lower profit

There were a total of 462 sub-sales in Q3, compared to 518 such deals in Q2. In percentage terms, sub-sales accounted for 11.6% of all sale transactions in Q3, compared to 12.0% in Q2.

In the same period, the number of sub-sales in CCR accounted for 24.1% of total transactions in this area, compared to 22.0% in Q2. In RCR, it was 11.6%, higher than the 11.1% in Q2; while in OCR, sub-sales took up 7.3% of all deals, lower than the 8.5% in Q2.

• Dwindling sub-sale profits

So far this year, a vast majority of 97% of sub-sale deals have resulted in profits. But the profits seen in Q3 were very much smaller as property prices started to hit the slippery patch.

In Q3, profitable sub-sellers made an average of $323,420, but this was because a single deal which turned in $6.7 million profit from the sale of a penthouse at The Sail at Marina Bay had jacked up the average figure. Without the abnormality, the average sub-sale gain was $301,784. This was about almost 40% lower than the average profit in the first half of the year.

On the other hand, sub-sale losses for Q3 averaged $76,820 for each negative sale. A unit at Watermark Robertson Quay chalked up the biggest loss of $207,552, while units at Soleil at Sinaran, 8 at Mt Sophia, and One Amber were also sold at losses of more than $100,000 each.

[B.6] Rents are marginally down in Q3

The latest data released by Urban Redevelopment Authority (URA) in October 2008 showed rents of most property types marginally down in Q3 2008. This may signal the beginning of a gradual down trend in rents.

In Q3, the private residential rents dropped by 0.9%; office rents were down by 0.8%; and rents for retail space cheaper by 0.6%.  Bucking the down trend was industrial rents which went up marginally by 0.1% in the same period.

^ Back to top