Analysis: Is the 'wait-and-see' property market finally over?

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More than a year after the July 2018 additional cooling measures led to dampened buyer demand, the Singapore property market appears to be springing back to life. Not only have past quarter official figures showed a rise in private home prices and number of new launch units sold, the latest PropertyGuru Property Market Index and our analysis sheds even more light on the situation: Buyers and sellers might just be starting to 'meet halfway' on price, signalling the end of an agonizing wait-and-see period.

What the PropertyGuru Q3 2019 Price Index reveals

The quarterly PropertyGuru Property Market Index is an analysis of two supply-side indices: the Price Index measuring average listing prices on PropertyGuru—the largest property portal in Singapore—and the Supply Index measuring the number of listings on the same portal in a given quarter.

In total, the Price Index (abbreviated as SPPI) tracked the asking prices of more than 90,000 property listings in Q3 2019. Crunching the numbers, we found that the average asking price in the non-landed private residential market.fell by 0.8% to 102.4 in the previous quarter. This marks a steady decline since the start of 2019, and a fall of 3.1% year-on-year from Q3 2018.

PropertyGuru Singapore Property Price Index Chart Q3 2019

“The gradual decline in the SPPI for three consecutive quarters since the start of 2019 may be attributed to the efficacy of the cooling measures that the government had introduced,” says Tan Kee Khoon, Country Manager of PropertyGuru. “The most literal and logical explanation of the downward movement is sellers and developers moderating their asking and launch prices to attract buyers.”

Meanwhile, Q3 2019 real estate statistics released by the Urban Redevelopment Authority (URA) on 25 October showed that the URA price index of private residential properties have continued to trend upward. Specifically, transaction prices of non-landed private properties increased 1.3% in Q3 2019, continuing a 2.0% increase in Q2 2019.

Buyers and sellers ‘meeting halfway’

Considering both the SPPI and the URA statistics for Q3 2019, it could be inferred that sellers have been revising their asking prices to make it more palatable to buyers, whereas buyers are increasingly willing to pay more, creating a situation where sellers and buyers are meeting halfway, in contrast to the wait-and-see mentality both sides had adopted in the first half of 2019.

The PropertyGuru Property Market Index report cites a telling example of how a newly launched condominium in District 21 has seen its developer gradually moderate selling price of units in the project since the additional cooling measures kicked in, and how the project has seen a highly positive Q3 2019—the best performing quarter for the project since launch.

It is an interesting example, and one that could reveal a lot about the shape of the private property market in the past quarter. “Although the cooling measures have dampened private home prices, it is likely that second-property buyers have begun to price-in ABSD (Additional Buyer’s Stamp Duty) into their total outlay, taking away its psychological impact,” said Tee Khoon.

“Those who may have delayed entering the market last year could be starting to enter now, with new launches being favoured due to lower quantum entry prices and the progressive payment scheme,” he added.

Indeed according to URA statistics, it is noteworthy that 58.7% out of all private residential units transacted in 3Q 2019 were new sales. This figure is the highest since the Q4 2014 and could point to the relative popularity of new launches versus resale condos among buyers in the current market.

Private home supply jumps in Q3 2019

Meanwhile, the PropertyGuru Supply Index (abbreviated as SPSI), which focuses on the number of non-landed private residential listings posted on PropertyGuru, saw a gain of 14.9% from 94.5 in the previous quarter to 109.2 in Q3 2019. This marks the biggest increase in supply of non-landed private homes in more than a year.

Notably, the increase in supply was despite Q3 2019 coinciding with the Hungry Ghost month. Right after that, developers moved to launch several large-scale condominium projects in the rest of the quarter. Parc Clematis (1,468 units), Avenue South Residence (1,074 units) and One Pearl Bank (774 units) were the three largest projects launched for sale that quarter, and with encouraging results.

“Buyers will no doubt welcome the gamut of choices with the number of new launches,” said Tee Khoon. In total, 20 postal districts had an increase in the number of listing postings in Q3 2019 which, when viewed in perspective with the increased transaction volume that saw 5,763 total non-landed private residential units transacted in that quarter, could indicate a significant reboot in property market activity on both the buying and selling fronts.

Interested to read the full report? Download the PDF (3.4MB) here: PropertyGuru Singapore Property Market Index Q3 2019

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