Commentary

2Q20 – Private home prices fell 1.1%

July 01, 2020

The Urban Redevelopment Authority’s (URA) flash estimate for the second quarter of 2020 shows that its overall price index for private homes shrank -1.1%, following the -1.0% drop in the preceding quarter. The price decline in 2Q20 was led by the decline in both the non-landed and landed homes indices

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

“The decline in the overall price index in 2Q20 is expected given the absence of new major launches and significant slowdown in market activities as a result of the circuit breaker (CB) measures, which took effect from 7 April of this year. During the CB period, show-flat operations and property viewings were suspended till 18 June 2020. Total transaction volume of private homes in 2Q20 (based on caveats in URA Realis to-date) were only half of that in 1Q20.

The decline in prices in 2Q20 was led by the landed segment which saw its index dropping -2.7%. Transaction volume of landed properties dropped 58% in the second quarter, more than the 49% fall for non-landed homes. The detached home market saw its 2Q20 sales volume plummet 71%, the steepest decline, compared to semi-detached and terrace homes. As landed properties have high absolute values, it has been more difficult to market them, especially with CB measures in place.

In CCR, about one-third of the non-landed caveats registered in 2Q20 came from Kopar At Newton. This project managed to move about 110 units during the quarter at a median price of $2,264 psf. The relatively lower pricing at Kopar At Newton compared to new sale transactions in the previous quarter contributed to the non-landed home index in CCR easing marginally in 2Q20.

In the second quarter, all non-landed new sales in RCR were from previously launched projects such as Parc Esta (101 units sold at median price of $1,674), Jadescape (73 units sold at a median price of $1,733) and others. The index for non-landed homes continued to soften during the second quarter of 2020 in the absence of significant new launches setting new benchmark prices in this sub-market.

On the other hand, prices proved to be more resilient in OCR as compared to other market segments. This could be attributed to the relatively healthier new sale transaction volumes in this market segment during the quarter. New non-landed home sales in OCR only declined by about 17% in 2Q20 as compared to the fall of 67% and 31% in CCR and RCR respectively. Popular projects such as Treasure At Tampines, Parc Clematis and The Florence Residences continued to attract many buyers, keeping prices relatively stable.

The gentle decline in the private home price index, despite a severe setback due to CB measures points to a fairly resilient market. In general, sellers are not unduly pressured although buyers remain cautious and price sensitive. The resumption of launches will place more units for sale on the market and pricing is expected to be more competitive to attract buyers. Barring a significant deterioration in market conditions in the second half of the year, we can expect prices to continue easing gently.”

Appendix

Prices of non-landed properties eased 0.6% quarter on quarter in 2Q20, after dipping 1.0% in the previous quarter. It was dragged down by drops of -0.1% and -1.9% in the indices for Core Central Region (CCR) and Rest of Central Region (RCR), respectively. Prices in Outside Central Region (OCR) remained unchanged in 2Q20, after falling marginally by 0.4% in 1Q20. Prices of landed homes fell by 2.7%, following a 0.9% decline in the previous quarter.

The changes in the price indices for the different market segments between 1Q20 and 2Q20 are tabulated below:

 

1Q20

2Q20 (Flash estimates)

Overall

-1.0%

-1.1%

Non-landed

-1.0%

-0.6%

  Core Central Region (CCR)

-2.2%

-0.1%

  Rest of Central Region (RCR)

-0.5%

-1.9%

  Outside Central Region (OCR)

-0.4%

0.0%

Landed

-0.9%

-2.7%

Source: URA Realis/JLL Research