Outlook for Singapore condo market

Romesh Navaratnarajah16 Jul 2015

Analysis on where residential prices and sales volumes are headed to help you make better informed property decisions.

by Adam Rahman

Without a doubt, the cooling measures implemented during 2012 and 2013 have applied the brakes to what many have begun to view as a dangerously overheated property sector. Over the past seven quarters, we have seen the reverse happening, with sluggish sales volumes of private condominiums appearing to be the norm, suggesting that successive rounds of cooling measures have been very effective. And without further indication from the government if they will be maintained, market sentiment is that this trend could continue for the time being.

Impact on price

It has been widely recognised that of the different regulations that were implemented, the Total Debt Servicing Ratio (TDSR) and Additional Buyer’s Stamp Duty (ABSD) have been the two most effective measures to cool the property market.

In fact, since the implementation of the TDSR in June 2013, we have had seven consecutive quarters of price falls in the private condo market since its peak in Q3 2013. TDSR limits borrowing to 60 percent of your monthly income, including all forms of debt, such as housing, car, and personal loans. This is to prevent over-stretching one’s finances.

ABSD, on the other hand, is the vehicle to curb speculation by Singaporeans who can afford more than one home; as well as the influx of foreigners from buying. Here are the rates for ABSD, on top of the basic stamp duty of 3.0 percent:

• Singaporeans: +0% / 7% / 10% (1st / 2nd / 3rd and more)
• PRs: +5% / 10% (1st / more than one)
• Foreigners: +15% for any number of residential property

Over the last seven quarters since the peak in Q3 2013, the overall private residential property index has dropped by 7.2 percent. Across quarters, the fall has been rather uniform, averaging 0.9 percent per quarter. The first two quarters in 2015 were not different, at -1.0 percent in Q1 and 0.9 percent in Q2 (see chart 1).

According to data from the Urban Redevelopment Authority (URA), various parts of Singapore were affected to a different extent, since Q3 2013.

Quick facts:

Capture 02

Core Central Region (CCR):

The Core Central Region (CCR) consists of districts 1, 2, 9, 10 and 11, stretching from Singapore’s Central Business District to Orchard Road, Cairnhill, Tanglin, River Valley, Newton and Bukit Timah. Due to its prime location and convenience, the residential developments in the CCR are the highest priced and most sought-after. It typically consists of luxurious homes and is considered an enclave for the wealthy.

For the past half a year, the price index of non-landed private properties in the CCR dropped the least among the three regions, recording a decline of 0.9 percent. This followed a rather turbulent five quarters previously for the region, with a -6.2 percent drop in the price index. It started with a big drop of 2.1 percent in Q4 2013, followed by an average of 1.0 percent per quarter in 2014, and then softened to 0.4 percent and 0.5 percent in Q1 and Q2 this year respectively.

This is in line with general market trends – when a market slowdown happens, the CCR will be the first to get hit the worst. Conversely, when the market picks up, it is also this region that will move first with the strongest growth.

The presence of some new launches could help to cushion the market slowdown. Marina One Residences, launched in Q3 2014, has sold some 84 percent of its launched units so far. The price drop in the CCR has now trickled to below 0.5 percent per quarter, possibly showing early signs of price stabilisation.


Rest of Central Region (RCR):

The RCR, traditionally known as the mid-tier market, continues to be a popular area that home buyers often have their eyes on by virtue of its relative proximity to the CBD.

Popular areas include: Bishan, Bukit Merah, Geylang, Kallang, Marine Parade, Queenstown and Toa Payoh.

The region is seeing a number of new developments that are drawing buyers in search of a greater selection of high quality condo options in smaller sizes, and at lower price points than those available in the CCR, yet still within easy reach of the city centre.

This offers savvy investors the opportunity to enter into a growing property market in a popular area, without the price tags associated with the higher end of the condo market in the CCR.

Amongst the three regions, the RCR was the only one that didn’t show a decline in Q4 2013. It managed to see a +0.4 percent increase over Q3, possibly due to the shift of original buyers of properties in the CCR to consider the RCR.

Property prices took a bad turn thereafter – moving into 2014, RCR was the worst-hit region, with a -5.3 percent price drop for the full year. The decline continued into Q1 2015 at -1.7 percent, which then slowed down to -0.5 percent in Q2.

Capture 03

Outside Central Region (OCR):

The OCR is widely recognised as the suburbs of Singapore, and includes the densely populated neighbourhoods of Punggol, Woodlands and Jurong, where a wide variety of mass market condominiums are located together with, in recent years, an increasing number of executive condominiums (ECs).

Although traditionally seen as a refuge for those who cannot afford the prices associated with condos in the CCR or RCR, this view has begun to change as new projects appealing to more savvy and upwardly mobile investors are appearing across the OCR skyline.

Today, the lure of private developments in the OCR lies in the perfect combination of price, location, size and surrounding amenities.

With the private property price index dropping 1.0 percent in Q4 2013 compared to the quarter before, its price movement in 2014 was very subdued, at only -2.2 percent. This was mainly due to many new launches in the OCR, whose price points were very attractive to HDB flat upgraders. However, good things don’t last – going into just the first half of 2015, prices have already dropped by -2.3 percent.

We see this as a natural progression. With prices in the RCR dropping by -7.1 percent since the peak of Q3 2013 and -5.5 percent in the OCR, their prices are converging.


Price trends:

The top left chart says it all – properties in the OCR are overpriced. Taking the base point (100) at Q1 2009, prices in the CCR have grown +30 percent, +42 percent in the RCR, and +60 percent in the OCR. Coupled with the correlation between demand and supply, and with price as the third factor, the land scarcity in the CCR and RCR should cause prices to increase, and the prices in the OCR to decrease due to land abundance.

This could be due to successful planning on the government’s part to decentralise the financial and services business from the CBD towards the suburbs, thereby increasing the popularity and demand of housing near to these regional centres. Some examples of such business parks and business clusters are Woodlands Regional Centre and Jurong Lake District. With smaller business zones identified outside the CCR, in time to come, it may be irrelevant to compare prices across the three regions, but instead, the distance from each business or satellite town.

That said, there is still room for further moderation of property prices in the OCR.


Based on initial flash numbers collated, 3,748 units of non-landed private properties were sold in the first half of this year – a 29 percent decrease in comparison with half-yearly results of H2 2014. It is worse when we compare it year-on-year (H1 2014), at a 41 percent decrease.

Of all the quarters since Q3 2013, we saw more new launches sold than resale, except for Q1 2015.

Transaction volumes are greatly affected by the number of new launches – and usually those that are priced for the mass market. In the chart below, we see that there is a direct correlation between number of new units launched, and the number of new launches transacted.

In 2015, about 15,000 units are estimated to be launched by the end of the year. In the first half of 2015, only 1,813 units for sale were recorded.

We expect an upswing in take-up rates, with more mass market-priced projects set to be launched in the second half of the year. In the first half, four new projects reported relatively good sales, namely:

GV Chart





  The PropertyGuru News & Views   This article was first published in the print version The PropertyGuru News & Views. Download PDF of full print issues or read more stories now!
Melvyn Loh
Jul 19, 2015
What about landed properties. Can you share some advise or notes with regards to the price drop till todate after our government measures??

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