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Singapore residential market gloomy due to ample supply and cooling measures

Singapore property

SINGAPORE (July 30): Singapore’s residential market growth is expected to remain soft in second half of the year, as developers take a restrained stance on new launches in response to homebuyers’ wait-and-see approach, according to a report by real estate consultant company Colliers International Research.

“Psychologically, buyers might be reluctant in making a purchase now, given that the future price for a newly acquired property could be lower in six to 12 months’ time. Additionally, the mood is not expected to improve due to concerns over higher interest rates,” said Colliers International in its report “Singapore Residential Property Market - 2Q 2015”.

As at March 2015, there were 19,359 private residential units unsold, which include launched and unlaunched projects with the prerequisites for sale. The company also estimates that the total new sales for this year will likely hover around 6,500 to 7,500 units, compared with 3,461 estimated primary transactions in the first half of this year.

The overall price of private homes on the island is still in a downward trend for the seventh consecutive quarter. According Colliers, citing data from the Singapore’s Urban Redevelopment Authority (URA), prices of private residential properties in the island have declined by 0.9% in second quarter of this year, compared with a 1% decrease in the first quarter.

The report also showed that the prices of the luxury and super-luxury apartment segment have softened moderately with a 0.7% quarter-on-quarter decline in 2Q2015 to average at S$2,459 (RM6,849) psf, after registering a decline of 3.7% over previous quarter.

“An increasing number of sellers, especially owners of luxury condominium units have adjusted their price expectations downward in order to move sales,” said Colliers.

The report also highlighted an alarming finding that some luxury condominium units were sold below their purchase prices in second quarter. For example, a 4,133 sq ft unit at Seascape Sentosa Cove sold for S$5.8 million or S$1,403 psf in May 2015, with a loss of S$5.2 million over the earlier purchase price in December 2011.

Despite the downtrend, the overall private residential price correction from the peak is still fairly moderate at a total decline of 6.7% over the course of the preceding 21 months, said Colliers.

“As such, the overall easing of prices in the private residential market can be considered a soft landing, without the turbulence of price volatility,” it said.

According to Colliers, the residential leasing market sees the existing tenant market poised to become even more advantageous to tenants due to a substantially increasing private residential stock that is paired with a slow growing pool of would-be occupiers.

Having declined by 3.1% in first half this year, the average monthly gross rents of luxury and super-luxury apartments are projected to decline by some 8% to 10% for this year.

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