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Thread: Hope of rebound as private home prices end 15 quarters of decline

  1. #1
    Join Date
    Oct 2011

    Default Hope of rebound as private home prices end 15 quarters of decline

    Hope of rebound as private home prices end 15 quarters of decline

    Oct 3, 2017

    Annabeth Leow

    It has been a long time between drinks, but property owners might just have reason to cheer after private home prices ticked up in the third quarter.

    The rise - while modest - ended a long 15-quarter decline and fuelled hopes that a rebound is under way.

    Values rose by 0.5 per cent in the three months to Sept 30 compared with the second quarter, according to flash estimates from the Urban Redevelopment Authority (URA) yesterday.

    But the public housing resale market continued to lag, with prices down 0.6 per cent quarter on quarter and 1.3 per cent lower than the same period last year, Housing Board estimates showed.

    The private housing market's recovery has been long awaited, although growth will be slow, industry watchers agreed, while HDB flat resales are likely to stay in a slump.

    Prices were up almost across the board for private homes, with landed home values jumping by 1 per cent after a previous quarter-on-quarter fall of 0.3 per cent.

    Non-landed properties in the core central region recorded a 0.2 per cent increase against a 0.5 per cent quarter-on-quarter decline in the three months to June 30, while homes outside the central region gained 0.7 per cent, compared with the previous drop of 0.3 per cent.

    The lone exception was non-landed properties in the central region but outside plum districts like the downtown core. Prices there stayed flat between the second and third quarters, after a previous 0.6 per cent rise.

    Ms Tricia Song, Colliers International Singapore's head of research, said a dwindling stock has helped to jump-start the market. She said: "Buyers waiting on the sidelines have decided to jump in, and developers and sellers have more confidence in raising prices."

    Foreign buyers were also spurred, she added, "as Singapore prices look attractive after falling for 15 consecutive quarters while other key gateway cities' prices have continued to increase".

    Savills senior director of research and consultancy Alan Cheong said the market's recovery felt overdue because "general sentiments were already stirring" for private apartments by the second half of last year.

    Given that the average growth period for home prices has historically been 17.4 quarters long, "this upturn may be the start of a multi-year price recovery", he added.

    But analysts noted that cooling measures could keep a lid on price increases, which are likely to be gradual, with the year's growth projected to be flat or modest.

    They were more bullish about the coming year, with JLL forecasting a 3 per cent to 5 per cent residential price increase for next year, and Edmund Tie & Company pegging the hike at an even rosier 4 per cent to 8 per cent.

    Mr Desmond Sim, CBRE head of research for Singapore and South-east Asia, said the overall quarterly increase "is the best indicator that the correction period of the market is past us".

    Still, he cautioned: "It is still too early to call for a rebound, as we need more than one data point."

    The same wait-and-see approach prevails for HDB resales, as prices slid for the fourth straight quarter, falling by 0.6 per cent after a smaller dip of 0.1 per cent in the second quarter.

    Mr Eugene Lim, key executive officer at realtor ERA, said: "This could be due to HDB introducing shorter wait times for Build-to-Order flats and the re-offer of balance flats in July this year."

    Mr Ong Teck Hui, national director of research and consultancy at JLL, noted that with 17,000 new flats this year, buyers need not turn to the second-hand market. "It does not appear that HDB resale prices will be recovering soon," he added.

    Edmund Tie & Company's research head, Dr Lee Nai Jia, also noted that the ticking clock on lease tenures is affecting older flats, saying: "Some buyers would be more concerned about buying older flats. Their main consideration is that the value of the flat would have declined substantially by the time they seek to upgrade or move after the minimum occupation period."

    The URA and HDB will release updated third-quarter statistics on Oct 27.

  2. #2
    Join Date
    Oct 2011

    Default First price rise in four years backs talk of property rebound

    First price rise in four years backs talk of property rebound

    URA's flash estimates show that the overall price increase was driven by condominium and apartment prices in the suburbs

    Oct 03, 2017

    Lee Meixian

    THIRD-QUARTER flash estimates for private home prices have showed the first uptick after four years - 15 straight quarters - of decline.

    The private residential property index of the Urban Redevelopment Authority (URA) rose 0.5 per cent in Q3, compared to a 0.1 per cent dip in Q2. The index had fallen more than 11 per cent since Q3 2013.

    Analysts had already anticipated the change in direction from tracking the higher sales volumes and transaction prices this year. The moderating decline in private home prices over the past quarters had also hinted at an imminent turnaround.

    But is this increase sustainable? Will prices keep climbing, or will they flounder about for a few more quarters before settling in a decided direction?

    OCBC Investment Research senior investment analyst Eli Lee likens the price index to an object of inertia that, once set on an uptrend, will likely keep going in that direction.

    "The market moves like a heavy tanker on the ocean. It's difficult to reverse course, and when it does, it stays on that path for some time."

    He said he expects prices to inch up 1 per cent this year, and another 3 to 8 per cent next year.

    Ong Teck Hui, national director for research and consultancy at JLL, also expects the overall index to continue rising in Q4. The whole of 2017 should register an increase of 0.5 per cent to 1 per cent, he said.

    Next year, prices could go up by another 3 to 5 per cent, assuming the cooling measures remain and barring unforeseen adverse external events that may derail a recovery.

    He believes the momentum will continue because the latest price increase shown in the index will reinforce buyers' and sellers' behaviours in a way that feeds back into the cycle to perpetuate the pattern.

    "The buyers are moving in because of the perception that the market is bottoming out. This increase in the price index will reinforce buyers' belief even more that prices will start going up, and those that are still sitting on the fence may well get off it.

    "And the sellers, knowing that the index is turning around, will stiffen or raise their asking prices even more, so this will perpetuate the whole thing."

    On the other side of the debate is Desmond Sim, head of CBRE Research, Singapore and South-east Asia, who prefers not to jump the gun; he opts instead to wait for another quarter of data to confirm the trend, as he believes it is still too early to call it a rebound.

    "Two dots make a line, three dots make a trend, but this is only one dot.

    "Yes, it is an indication that the correction phase is possibly over, but we still need to collect more data points to call for growth in the market.

    "The trough of the market has already hit us. We are expecting a longer, U-shaped recovery, which doesn't necessarily mean a straight flat line, but a hovering around 0 to 2 per cent for the next few quarters."

    He expects a 0 to 2 per cent price increase for the whole of 2017, followed by a 2 to 10 per cent increase in 2018, with the higher end of the 2 to 10 per cent range a result of developers having to push up their prices in order to maintain their profit margins following their aggressive land bidding.

    URA's flash estimates show that the overall price increase was driven by condominium and apartment prices in the suburbs, which rose 0.7 per cent; in the central region, they rose 0.2 per cent.

    The prices of landed property rose 1 per cent in Q3.

    Conversely, condominium prices in the city fringe stayed unchanged.

    The price changes by regions depend heavily on the launches and projects actively marketed in any given quarter.

    Consultants believe that the performance of the suburban market could have been bolstered by positive sales at projects such as Le Quest in Bukit Batok, The Santorini in Tampines, North Park Residences in Yishun, Kingsford Waterbay in Upper Serangoon View and Grandeur Park Residences in Tanah Merah.

    The price recovery in landed homes was likely due to the good response to Victoria Park Villas in the prime District 10.

    JLL's Mr Ong said: "Landed home prices corrected the most in the last four years, with the landed index dropping 16 per cent between Q3 2013 and Q2 2017, while that for non-landed homes eased 10.2 per cent for the same period. There is a strong rebound in demand for landed properties as buyers try to capitalise on attractive prices."

    According to URA Realis data, the approximately 16,000 private residential transactions (including new sales, resales and sub-sales but excluding executive condominiums) between January and August is about 54 per cent higher than in the corresponding period last year.

    The flash estimates were compiled based on transaction prices given in contracts submitted for stamp duty payment and data on units sold by developers up till mid-September.

    Statistics for the full quarter will be released on Oct 27.

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