Get a bird’s eye view of the entire Singapore market’s performance based on macro factors that matter.

Private Residential Price Index 2006 - 4Q 2009

Source: URA, Realis

Private home prices have shot up further by 7.3% in the final quarter of the year, allowing 2009 to finish on a positive note.  Overall, prices have increased by 1.7 per cent last year. This came after the stellar performance in the third quarter, where prices surged by 15.6 per cent – the largest quarterly rise in 28 years.  Now, prices are only 6.6 per cent down from the peak despite in the midst of an economy recovery.

Quarterly Percentage Change in Price Indices 2009

Source: URA, Realis

Prices of non-landed homes on the city fringes rose by 9.5 per cent in the 4Q, the most among the 3 region, and were overall up by 3 per cent for the year.

However, the star performer was still the non-landed suburb homes which posted an increase of 11.7 per cent for the full year despite only edging up 6.3 per cent in the fourth quarter.

On the other hand, prices for non-landed city centre homes were still down by 1.8 per cent for 2009 although the 7.3 per cent increase in the last quarter points to a recovery.

Overall, experts believe that by the end of year, prices may have surpassed the previous peak with the high-end segment leading the market. Even the property tycoon, Kwek Leng Beng, also voiced his optimism in this sector.  According to a news article, on 16 Jan 2010, Mr Kwek feels that the luxury home prices can easily jump by more than 10 per cent this year as they are still about 25 per cent off the previous peak.
 

Price Trends of Residential Projects by Segments

Source: URA, Realis

Based on some of the developments which were heavily transacted last year, both the mid-tier and mass market homes have surpassed their previous peaks by 10% and 11% respectively. On the other hand, prices of high-end homes are still about 14% off its peak.

Interest for high-end homes was observed to have returned where there were 250 high-end deals transacted above $2,000psf from Jul to Sep, up from 85 for the first half of the year. However, with the implementation of the anti-speculation measures, only 157 deals were observed from Oct to Dec.

To date, the most expensive unit sold in 2009 was a unit sold by the developer at the Boulevard Vue for $4,150psf in Nov. However, this is still a far cry from the highest psf benchmark set by a penthouse at the same development in 2007 at $5,600psf.

Summary for the price performance:

• Private home prices have shot up further by 7.3% in the final quarter of the year. Overall, prices have increased by 1.7 per cent last year.

• Prices of suburb homes rose by 11.7 per cent for the year, followed by the mid-tier with 3 per cent. However, city-centre homes are still down by 1.8 per cent. 
   
• Most analysts believe that by the end of year, prices may have surpassed the previous peak with the high-end segment leading the market.
   

Quarterly Percentage Change in Rental Indices 2009

Source: URA, Realis

Private home rents finally rose by 0.6% in the last quarter of the year, reversing 5 quarters of decline. This could signify that the expatriates, which form the bulk of tenants of private homes, are slowly coming back as companies start to hire once again.

Although they are 14.6 per cent down for the whole of last year, consultants believed they are stabilizing and are on the way to recovery.

According to Ms Tay Huey Ying, Colliers International’s director for research and advisory, high-end homes in central areas, which are traditionally more popular with expats, will take the lead. Rents there are expected to grow by 8 to 12 per cent due to their proximity to the integrated resorts, the Central Business District and the Orchard Road shopping belt. 
However, the rental yield could still remain low for a period of time as the prices are still increasing at a faster rate than the rentals.

The Total Number of Private Properties Units Sold (2004-2009)

Source: URA, Realis

32,817 units changed hands for the whole of last year, an impressive number given that the economy is still in the midst of recovery.  Only 5,812 units were sold in the last quarter, less than half of the sales in the preceding quarter which saw 12,718 transactions.

Breakdown of Units Sold into New Sale, Resale & Subsale (2007 - 2009)

Source: URA, Realis

A higher proportion of private home buyers are turning to the resale market in the last quarter of 2009 (indicated by the red bar in the above chart). Fewer launches by developers in Q4 and the removal of the interest absorption scheme in September last year probably contributed to this shift.  

As a result, the resale market accounted for 57 per cent of private residential caveats lodged in Q4, up from 27.5 per cent in Q1. Conversely, developers saw their share of total private home sales slide from 62 per cent in Q1 to 32 per cent in Q4.

Subsales’ share of total transactions remained unchanged for the entire year, at about 10 per cent.

Percentage of Total Sales accounted by New Home Sales (1Q 2004 - 4Q 2009)

As seen from the chart above, new sales accounted for 62.5 per cent of the total sales in the first quarter of 2009, the highest figure since the authorities started releasing such statistics in 2004. However, it has since declined to only 32 per cent of the total sales.

Number of new units sold monthly (Jan '08 - Dec '09)

* New Units comprises of Completed and Uncompleted units sold
Source: URA, Realis

Developers sold only 481 homes, the fifth consecutive month of sales decline after transactions had peaked in July at 2,772 units. Last month’s figure brings the total sales of last year to 14,688 units, just 0.6 per cent short of 2007's record tally and about 3.5 times sales in 2008.

Number of new units launched and sold monthly (Jan - Dec)

With buyers holding back, developers launched fewer units last month. Just 734 were launched, down from 923 in November, according to URA data.

Number of new units sold by location (2009)

Source: URA, Realis

As seen from the table above, sales in the core central region has taken the lead in developer sales in the fourth quarter of last year.  It seems that interests for high-end properties have started to return.

In the beginning of the year, we saw a huge demand for mass market properties due to a combination of pent up demand and lower prices. With prices of non-landed suburb homes up by 11.7 per cent for the year, demand for them has slowly subsided.  

Percentage of New Sales contributed by each region (1Q 2006 – 4Q 2009)

Source: URA, Realis

From the chart above, we can see that the proportion of new sales in core central region surged to 46.5 per cent in the last quarter of the year.

Private Residential Units Sold in Subsale (2006 - 4Q 2009)

Source: URA, Realis

Speculators are partly responsible for the overheated property market in 2007, but they are needed to generate a healthy level of activity in the secondary market. During the peak in the boom time, the subsale transactions reached a record high of 1,892 units in 2Q 2007 which eventually subsided to only 267 units in 4Q 2008 due to the financial crisis.
On 14 September, the government announced a slew of measures in an attempt to cool the property market. Among the measures is the scrapping of the interest absorption scheme (IAS) with immediate effect.

The IAS has been popular among property speculators because it allows them to fork out a downpayment of only 10 per cent or 20 per cent, while the remaining amount will be deferred until the completion of the property. The flip side is that the scheme is offered with a premium, which is 2-5% over the sale price. Therefore, many analysts reckon that this announcement will only deter the speculators but no genuine buyers.

The cooling measures proved to have some effects as we saw a lower subsales in the fourth quarter, down by 55 per cent.

Estimated Supply of Private Residential Units in the Pipeline as at End of 3Q 2009

Source: URA, Realis

URA’s figure for the total planned units slated for completion this year and beyond has also fallen by more than 8,000 – from over 68,000 in the 1Q 2008 to the current 59,728 at end-Q3 2009.

URA expects 1,805 units to be ready within the last 3 months of the year.

Will there be an oversupply?

There should not be an oversupply issue. In 1996-2000, 43,000 (both private and public) homes were completed per annum. In the last 5 years, HDB has actually cut back on the number of homes built by 70% to 13,500.

At the same time, resident population has been increasing at a compounded rate of 1.4% from 1996-2008 and the net increase in 2008 was 59,600. Assuming an average household size of 3.5 persons, this could translate to a housing demand of 17,000 units.

In April, demand for HDB bigger flats (3 bedroom and 4 bedroom) has been oversubscribed by 23 times. Hence, there is a high possibility for an overspill to the private home market.  In 3Q 2009, price of 3 bedroom in the resale market has risen by 7.1% to $605psf, which is near the previous peak in 4Q 2007.

Percentage of non-landed homes bought by HDB upgrades (1Q 2006 – 4Q 2009)

HDB upgraders account for a shrinking share of private home transactions as property prices rise and mass-market launches taper off.

Buyers with HDB addresses accounted for only 35.3 per cent of private home purchases in Q4 2009, a huge slide from a high of 58.1 per cent in Q1 last year.  During the peak, the HDB upgraders only accounted for 22.1% in 3Q 2007.

Foreigner's Purchase of Non-Landed Properties (1995-2009)

Source: URA, Realis

Foreigners’ share of non-landed private properties increased to 13 per cent in Q4 last year, from a low of 5 per cent in Q1 2009. Their relatively low share in the first half of last year dragged down their full-year share to 10 per cent from 13 per cent in 2009. However, in absolute numbers, the number of non-landed private homes bought by foreigners increased more than half from 1,487 in 2008 to 2,735 last year.

Price Range of Non-Landed Private Homes bought by Foreigners (1Q 2009 & 2Q 2009)

Source: URA, Realis

In the first quarter, more than half of the homes bought by the foreigners were between the price range of $500,000 to $1 million. In the third quarter, we see foreigners started to return units that are priced above $1 million, 8.6 times more than first quarter.

The 4 Major Nationalities that purchase Singapore Non-landed Private Properties (1998 - 2009)

Source: URA, Realis

Over the years, Malaysians and Indonesians, including PRs, are the top 2 foreign investors in Singapore property market. From 1998 to 2003, Malaysians were the largest pool of foreigners who had purchased the non-landed private homes. In 2004, however, the Indonesians had overtaken the Malaysians.

In 2009, the Malaysians are back again at the top. They have contributed 36 per cent of the total non-landed private units acquired by foreigners and PRs in 2009 compared to 26 per cent by the Indonesians.

This could be due to the reason that Indonesians tend to pick up homes mostly in the $1.5 – 5 million range and there is a limited supply as developers held off launching their posh projects last year.  

We reckon that the Indonesians could dominate the market once again as developers launch more luxury properties this year.

For in-depth insights to specific homes features that play an important part in a property’s value

Seaview Vs Non-seaview

Caribbean@Keppel Bay

Based on the chart above, a Seaview unit at The Caribbean, was transacted at about $139psf more than a Non-Seaview unit on average.

The Berth @ Sentosa Cove

Source: URA, Realis

 Based on the chart above, a Seaview unit at The Berth, was transacted at about $151psf more than a Non-Seaview unit on average. This means that a seaview unit costs approximately 12.1% more than a non-seaview unit. This premium was observed to range from as low as $70psf in the early 2007 to about $380psf, during the peak period, in Nov 2007.

The Oceanfront @ Sentosa Cove

Source: URA, Realis

As for the seaview unit at The Oceanfront, a higher average premium of $365psf was observed. This would mean that a seaview unit at The Oceanfront costs 23.6% more than a Non-seaview unit. The premium for The Oceanfront, ranges from about $230psf in early 2007 and to about $650psf in Oct 2007.