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Transaction volume contracted by 37% in September 2009
SINGAPORE, 15 October 2009 – On a monthly basis, buying sentiments in the private residential market look to have weakened on the back of seasonal decline and new government measures that were introduced on 14 September. Overall monthly volume in September has declined by 37% to 1,143 units. This is the second monthly decline from the previous month’s sales volume of 1,804 units - a 35% contraction from the month before. From historical trends, such results are not unusual given that demand in the last quarter of the year is usually slower. If we compare the sales volume with that a year ago, the current volume is still some 204% higher (compared to 376 units sold in September 2008). OCR (or mass market projects) dominated the market contributing to some 560 units or 49% of total transactions.
Dr Chua Yang Liang, Head of Research South East Asia says “if you compare the current demand to the market run up in September 2007, it exceeds by an alarming 122%. This is an area of concern considering that we are just slowly emerging out of a recession and unemployment outlook remains fragile.”
Table 1: Total islandwide units (landed + non-landed) sold
Developers have held back supply as they anticipated buyer’s reaction to the government’s anti-speculative measures released on 14 September. Overall new launches contracted 12% (1,413 units) from the 1,613 units launched in August 2009. OCR is the only submarket where there was an increase of over 100% in new launches – driven mainly by Hundred Trees (West Coast), Elliot (East Coast) and Oasis@Elias (Elias Road).
Table 2: Total islandwide units (landed + non-landed) launched
Adjusting these monthly statistics into a quarterly reflection of data, 3Q09 holds the highest quarterly transaction volume recorded since the series started in June 2007. Some 5,719 units were sold in 3Q09, higher than the previous quarter by 21.3%. This strong demand has also been similarly reflected in URA’s recent flash estimates of its Property Price Index (PPI) which recorded an increase of 15.9% in 3Q09
Table 3: Total islandwide units (landed + non-landed) Quarterly Data
Dr Chua says “Looking at the behaviour of the PPI against the volume of transaction, we notice that the rate of change of the PPI is closely correlated with the transaction volume, albeit lagging by some two-three months. With the anticipated slowdown in demand towards the end of 2009, we can expect islandwide PPI to remain stable if not a marginal increase of 5-8% by year end”. He continues “looking beyond into 2010, while there are positive signs of market stabilization in Singapore and the region unemployment remains uncertain. Although it's a lagging indicator, if the rate of property price increase is not matched by adequate job creation and income growth, further government policies could be introduced to cool the property market.”
Dr Chua Yang Liang
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