After rising for three consecutive quarters, Singapore’s private residential property prices fell in the first quarter of 2020, due to the impact of Covid-19 on the economy.
Urban Redevelopment Authority’s (URA) flash estimates showed that private home prices fell 1.2% quarter-on-quarter in Q1 2020, “giving back almost half of the 2.7% gain recorded in the full year 2019”, noted Tricia Song, Head of Research for Singapore at Colliers International.
The quarterly drop in prices was across the board, with the landed segment posting a 1.7% quarter-on-quarter drop and the non-landed residential segment a 1.0% decline.
Across the regions, the Core Central Region (CCR) saw prices fall 1.5% quarter-on-quarter in Q1, slower than the 2.8% decline in Q4 2019.
Song said the decrease in Q1 non-landed CCR prices “could be due to selected launches sold at perceived discounts”.
The M, which emerged as the best-selling project in Q1, sold 389 units at a median price of $2,438 per sq ft (psf) during the period under review. This is lower than the $2,934 psf median price achieved at nearby Midtown Bay in Q4 2019.
The 26-unit Enclave at Holland, which was launched since July 2018, moved 14 units in Q1 at a median price of $1,851 psf, down from the earlier prices of units sold at $2,500 to $2,600 psf.
Home prices in the Rest of Central Region (RCR) fell 0.5% quarter-on-quarter in Q1, after dropping 1.3% in Q4 2019. The Outside Central Region (OCR) also saw private home prices decline 1.0% quarter-on-quarter, reversing the 2.8% hike seen in Q4 2019.
Song noted that transactions tapered off sharply in March from the previous month, as the effects of Covid-19 began to “reverberate through the economy and hurt sentiment”.
“Based on caveats downloaded on 1 April 2020, developers sold 528 new homes (excluding ECs) in March 2020, down sharply from the 947 units in February. Secondary transactions were also down, at 328 units in March, from 436 units in February,” she said.
And with GDP contracting -2.2% year-on-year in Q1, authorities also expect the city-state to head into its first recession in two decades, placing 2020 growth at between -4% and -1%.
In view of the economic contraction, Colliers expect private residential prices to decline by 1% to 3% in 2020.
However, it does not expect prices to “fall as much as the 25% over Q2 2008 to Q2 2009 due to the Global Financial Crisis (GFC) as there were rampant speculation and loose credit prior to the GFC”.
“The nine rounds of property cooling measures in 2009-2018 have reined in speculation and price increases over the past three years were more sustainable, in our opinion,” said Song.
Colliers expect developers’ sales for this year to fall to 8,000 units, compared to 2019’s 9,912 units.
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