Property sales were generally muted as well with lockdowns imposed around the world and stricter safe distancing measures.
After rising for three consecutive quarters, prices of private residential properties in Singapore fell 1% in the first quarter of 2020, showed Urban Redevelopment Authority (URA) data on Friday (24 April).
On a year-on-year comparison, prices have increased by 2.4%.
“Singapore’s property market recovery came to an abrupt halt amid the global pandemic and growing macroeconomic uncertainties,” said Christine Sun, Head of Research and Consultancy at OrangeTee & Tie.
But while prices slipped in Q1 at the onset of the pandemic, the “magnitude of decline was not as severe as what was observed during the early stages of past crises”.
“For instance, around the initial phase of the Asian Financial Crisis, the first quarterly decline of 1.9% was recorded in Q3 1996, while prices dipped 2.4% in Q3 2008 at the start of the Global Financial Crisis,” she said.
The price decline in Q1 was led by the Core Central Region (CCR) where prices dropped 2.2% quarter-on-quarter. The Rest of Central Region (RCR) and the Outside of Central Region (OCR) saw prices drop 0.5% and 0.4%, respectively.
Sun attributed the steeper price fall within the CCR to a higher proportion of high-end homes sold below $2 million, which rose to 58.4% in Q1 2020 from 40.4% in the previous quarter.
Property sales were generally muted as well with lockdowns imposed around the world and stricter safe distancing measures. Foreign countries could not enter Singapore while showflats were closed and house viewings were postponed.
“Therefore, it is of no surprise that overall sales volume declined 12.5 per cent from 4,878 units in Q4 2019 to 4,269 units in Q1 2020,” Sun noted.
Sale transactions in the resale market have also been lagging behind since the July 2018 cooling measures. Resale property sellers have also faced strong competition developers who have been marketing their new projects aggressively. Things have also become more difficult for resale sellers in this circuit breaker measures as no house viewings are allowed.
Overall, 2,080 resale homes were sold last quarter, fewer than the 2,149 new homes that were transacted over the same period.
Meanwhile, private rental volume increased 2.4% to 21,191 units in Q1 2020 from 20,703 units in Q4 2019. Sun attributed this to an increase in rental renewals as a result of foreign workers who required immediate lodging prior to the circuit breaker measures as well as the lockdown imposed by Malaysia. Many tenants were also reluctant to scout around for alternate housing to minimise the possibility of catching the virus.
With this, rents for private homes climbed 1.1%, while occupancy rate marginally improved to 94.6%.
Lee Sze Teck, Director of Research at Huttons Asia, does not expect the hike to continue as the employment conditions within the city-state is expected to worsen over the next few quarters despite government support.
Looking ahead, Sun expects private home prices to decline by up to 4% this year if the pandemic persist.
“Around 14,500 to 16,800 private homes could be transacted this year, of which new home sales may constitute around 7,500 to 8,500 units,” she said.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email email@example.com