Property Market Index Q3 2020: Property Price and Supply Overview

Eugenia Liew
Property Market Index Q3 2020: Property Price and Supply Overview
According to PropertyGuru Property Market Index Q3 2020 which reviewed the property sector’s performance in the second quarter of the year, there was a slight rise in the Singapore Property Price Index (SPPI) and a significant increase in the Property Supply Index (PSI).
Much of the economy had come to a halt during the two months of the circuit breaker, but halfway through the quarter when Singapore entered Phase 2 of its reopening, the market saw a rebound.

Price Index Overview: Prices strengthened marginally due to a higher proportion of new launches sold during the circuit breaker

The PropertyGuru Singapore Property Price Index (SPPI), which tracks asking prices in the non-landed private residential market, increased marginally by 2.15% to 111.9 quarter-on-quarter.
Despite the Urban Redevelopment Authority’s (URA) flash estimates of a 1.1% decline, official figures released on the 24 July 2020 showed that the non-landed private market increased by 0.3% in the same quarter.
However, underlying the apparent increase in the price index is an anomaly that should be highlighted, as the proportion of resale properties transacted in the last quarter is significantly lower (only 35% of the total transactions).
This is likely due to the prohibition of physical viewings that has a larger impact on completed properties than new launches.
In comparison, the quarterly average proportion of resale transactions to total transaction volume (new sale, sub sale and resale combined) for the preceding four quarters is 46.9%.
Hence, it is our view that the primary market figures have buoyed the overall price index despite considerable price pressures in the resale market.
Median per square foot asking prices in Orchard and River Valley have once again made it to the list of districts with the most price declines. We anticipate that they are likely to face more headwinds in the coming quarters with the significantly higher supply numbers.
At this stage, it appears that the man on the street is yet to feel the complete brunt of COVID-19’s economic impact as the government stimuli continue to prop up businesses and employment numbers.
However, as discretionary spending goes down and household budgets tighten, the next few months of transaction data might see phased trimming or even require an extension of the temporary relief measures for the property market.

Supply Index Overview: Significant growth in the number of willing sellers

The PropertyGuru Singapore Property Supply Index (SPSI), which tracks the number of non-landed private residential listings posted on PropertyGuru, recorded a gain of 46.39% from 192.9 in Q1 2020 to 282.4 in Q2 2020.
In absolute numbers, the recorded number of listings is 162,069, compared to 110,710 in the previous quarter. The 51,359 increase in listings indicate a peak in supply that surpasses all previous quarters’ numbers since records began in Q4 2016.
Meanwhile, URA statistics recorded a 0.1% decline in vacancy rates for the OCR and RCR regions, while the CCR region recorded a 0.1% increase. The overall vacancy rate for the private residential market remained unchanged over the previous quarter at 5.4%.
We also noted that there was only a marginal increase of 222 units in uncompleted private residential supply (excluding Ecs) in the pipeline with planning approvals.
These figures suggest that the record-high increase in the PropertyGuru Singapore Property Supply Index comes primarily from resale market owners who are keen to let go of their properties.
With thanks to Stuart Chng for his contributions to this report – Stuart is the Senior Associate Executive Director of OrangeTee & Tie, a renowned leader in the real estate industry and co-founder of Navis Living Group.
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