4Q18 – Likely end to price recovery due to cooling measures

Based on flash estimates, the URA’s overall private residential property price index slide 0.1% in 4Q18, a reversal from the 0.5% rise in 3Q18, which was when a fresh round of cooling measures was introduced. The new set of cooling measures, which took effect from 6 July, slowed price growth in the private home market in 3Q18 and subsequently put a brake on a price recovery that lasted for only five quarters, the shortest since the price index data was available. Nonetheless, for the whole of 2018, prices still recorded a rise of 7.9%, a leap from the 1.1% increase in 2017.

The changes in the price indices for the different market segments between 3Q and 4Q18 are tabulated below:

Source: URA Realis/JLL Research

The landed segment showed the deepest price contraction in 4Q18, falling 1.8% q-o-q. This is a reverse from the trend in the preceding three month period where land property prices recorded the strongest rise in prices of 2.3% q-o-q.

Over in the non-landed segment, overall non-landed property price index actually inched up 0.3% in 4Q18 from 0% in 3Q18, lifted by a rebound in prices in the RCR and OCR submarkets.

The price index for non-landed properties in the RCR registered the highest increase of 1.8% q-o-q in 4Q18. This comes on the back of a 1.3% q-o-q contraction in 3Q18, also the most severe among the other market segments in that quarter. Pricing continued to be driven mainly by the primary market which accounted for about 70% of transactions in the RCR. The RCR saw the most number of new launches in 4Q18 with projects such as Arena Residences, Kent Ridge Hill Residences, Parc Esta and The Woodleigh Residences being pushed out to the market for the first time. Sales were fairly healthy for these four projects which managed to sell about 50% to 77% of their units launched in the first month of sales at median prices ranging from SGD 1,699 to SGD 2,002 psf. 

The index for non-landed homes in OCR also regained 0.8% q-o-q in 4Q18 after a momentary correction of 0.1% q-o-q in 3Q18. Whistler Grand was the only new launch in OCR in 4Q18. It sold about 227 units at a median price of SGD 1,350 psf. This is near the median price achieved for the nearby Twin Vew which was launched in May 2018 at a median price of SGD 1,385 psf.

Conversely, prices for non-landed homes in CCR retreated in 4Q18 as shown by the -1.5% fall in the index. Three new projects were launched in the prime area in 4Q18; the 56-unit 10 Evelyn, the 96-unit 3 Cuscaden and the 77-unit 3 Orchard By-The-Park. Though there were three new launches in the CCR in 4Q18, pricing was still driven mainly by the secondary market which accounted for about 73% of transactions in CCR as sales were slow in the new launched projects. 3 Cuscaden sold about 25% of their units at a median price of SGD 3,545 psf while 10 Evelyn and 3 Orchard By-The-Park sold less than a handful of units.

Mr Ong Teck Hui, Senior Director of Research & Consultancy at JLL, commented:

“With softer market conditions due to the July cooling measures, our assessment was that the overall index could skew mildly positive or negative in 4Q18 after the mild +0.5% increase in 3Q18. So the -0.1% easing of the overall index was within expectations. The disparate price movements among the different market segments i.e. landed (-1.8%), non-landed CCR (-1.5%), RCR (+1.8%) and OCR (+0.8%) is indicative of a market in transition towards a softer phase.

With the change in the non-landed index averaging +0.3%, the landed segment (-1.8%) was the major contributor in pulling down the overall index to -0.1%. Being bigger ticket items, landed home prices have taken a greater beating as demand softened.

Taking into account the substantial supply in the launch pipeline and a price-sensitive market, prices are expected to flat-line with a downside bias in 2019.” 

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