Here’s what you need to know about the latest 3Q2019 real estate statistics
URA just released the latest real estate statistics for 3Q2019. This is what Singapore property owners and buyers need to know about, according to Christine Sun, Head of Research & Consultancy at OrangeTee & Tie.
While many sectors are currently facing slower growth in the shadow of rising global uncertainties, private home prices and sales volume have continued to climb last quarter which may have left many investors flummoxed over the resilience of Singapore’s real estate market.
In spite of the global economic headwinds and cooling measures, private home prices continued to rise last quarter by 1.3 per cent after rising 1.5 per cent in the prevailing quarter. The price index has risen faster than the earlier flash estimate of 0.9 per cent. Cumulatively home prices have risen 2.1 per cent in the first three quarters of this year.
The price increase for private homes was broad-based across all segments, where the price of non-landed homes increased 1.3 per cent quarter-on-quarter (q-o-q) while prices of landed homes rose at 1.0 per cent over Q2 2019. The price increase for non-landed homes was led by the Core Central Region (CCR) which saw prices rising 2.0 per cent q-o-q, followed by the Rest of Central Region (RCR) at 1.3 per cent and the Outside of Central Region (OCR) at 0.8 per cent q-o-q.
New home sales (excluding ECs) surged 39.6 per cent from 2,350 units in Q2 to 3,281 units in Q3 this year. This is the highest number of new homes sold in a single quarter since Q2 2013 (4,538 units) which is before the implementation of the TDSR (Total Debt Servicing Ratio) in June 2013.
The number of non-landed homes being sold in RCR and OCR have increased substantially last quarter. New sales in RCR increased 32.7 percent from 1,162 units in Q2 2019 to 1,542 units in Q3 2019 while the number of new sales in OCR rose 53.5 percent from 1,018 units to 1,563 units over the same period.
Does the market performance signal a risk for more cooling measures?
While private home demand and prices have remained relatively resilient despite the current global economic uncertainties, the positive market performance may not signal a need to put a brake on the property market now by implementing more cooling measures in the near term. The risk of a housing bubble forming is rather remote as this is usually caused up a significant run-up in home prices caused by high speculative demand, runaway land prices, and excessive buying that is fuelled by exuberant spending.
Currently sub-sale activities, an indicator of speculative demand, is still at a low – constituting around 1.8 per cent of total sales as opposed to the 11.6 per cent in Q4 2009, which is before the implementation of the Seller Stamp Duty in February 2010.
The pace of price increase has also slowed down last quarter. The cumulative price growth for the first three quarters of this year is 2.1 per cent, which is much slower than the 7.9 per cent increase that we have seen over the same period in 2018. Safeguards like the TDSR (Total Debt Servicing Ratio) that are put in place to prevent excessive borrowing has kept many homes buyers from overstretching their finances. The overheated collective sales market has cooled down substantially and recent land bids are currently more measured.
Rentals of non-landed properties continued to increase by 0.4 per cent last quarter, after rising 1.4 per cent in the prevailing quarter. The rental increase was mainly driven by the non-landed home segment where rents rose in RCR (1.6 per cent) and OCR (0.8 per cent). Vacancy rates of completed private residential properties have also been lower for RCR and OCR.
The improving leasing market may be attributed to more expats being redeployed to Singapore lately. Thousands of multinational companies have set up regional offices in the Asia Pacific, and Singapore may now be taking the lead as a key Business Hub in Asia in view of the rising tensions in Hong Kong. Companies with footholds in Singapore and Hong Kong may shift their main operations here given that Singapore is also a strategic gateway to many global markets. Singapore has also cemented its reputation as one of the best places to do business, politically stable and an island of enormous potential.
Therefore, the leasing market may continue to strengthen in the coming months. Leasing demand for homes in the city fringe and luxury segment may improve as more expat professionals may continue to be redeployed here.
With more than 7,000 new homes being sold in the first three quarters of this year, the total number of new home sales are likely to fall within our earlier projection of between 9,000 and 10,000 units for the whole of 2019.
While prices have continued to rise for a second consecutive quarter, the slowing economic growth and rising supply of new homes may continue to keep a lid on any drastic price hikes. Therefore, we maintain our price projection for the whole year to be between 1 and 3 per cent.