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News Release

Singapore

JLL’s perspective: Flash estimates of 2nd quarter 2014 Private Residential Property Index

Softening in price index continues, with moderated prices at new launches and price cuts in previously launched projects taking effect


Singapore, 01 July 2014 - The private residential property price index slid 1.1 per cent in 2Q14 compared to 1.3 per cent in the previous quarter. This is partly due to the milder 0.6 per cent decline in the index for Rest of Central Region (RCR) compared to its more significant drop of 3.3 per cent in 1Q14. In contrast, both Core Central Region (CCR) and Outside of Central Region (OCR) registered index declines of 1.5 per cent and 1.1 per cent respectively. These declines were more than those in 1Q14 when CCR's index softened 1.1 per cent while that of OCR eased a marginal 0.1 per cent.

Change in Private Residential Price Indices

 1Q20142Q2014
Non Landed  
 Core Central Region-1.1%-1.5%
 Rest of Central Region-3.3%-0.6%
 Outside Central Region-0.1%-1.1%
Landed Residential Properties-0.7%-1.5%

Source: URA, JLL

The continued softening in the price indices is a reflection of the disequilibrium between supply and demand, which has led to new launch prices being toned down, as well as prices of previously launched projects, which are struggling with poor sales, being reduced. For example, Lakeville and Coco Palms which registered the top two numbers of caveats in OCR in 2Q14 had median prices of $1,318 and $1,020 psf respectively. This is estimated to be 10 to 15 per cent below what they could have been launched at before TDSR was imposed. Another example is that of Sky Habitat which registered the highest number of caveats in RCR in 2Q14. Its median price of $1,371 psf during 2Q14 is 13 per cent below that during the quarter when it was first launched.

Taking stock of the cumulative price declines up to 2Q14, CCR is clearly the weakest sub-market having fallen 5 per cent in its index after 5 consecutive quarters of decline. The RCR index has declined 4.4 per cent compared to a year ago while OCR, being the more resilient segment, had a more moderate fall of 2.1 per cent over 3 quarters. As market confidence in CCR remains lacklustre, with local investors and foreigners being deterred by the cooling measures, further price weakening amongst the three market segments is likely to be led by CCR. The OCR sub-market is still well supported by owner-occupier buyers and HDB upgraders but who are now more price-sensitive.​

Mr Ong Teck Hui, National Director, Research & Consultancy, JLL comments:

"Although some projects seem to be launched 'successfully' with good sales take-up, they still subsequently struggle to move unsold units. Some developers have decided that they have no choice but to trim prices in order to move sales or to launch new projects at moderated prices. However, price cuts raise buyers' expectations of further discounts and this feeds into a downward price cycle as we are seeing, albeit a gentle one, currently. The price index decline of 1.1 per cent in 2Q14 is in keeping with our expectations of average quarterly drops of between 1 and 2 per cent for this year."

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