Private home prices in Singapore have fallen for 12 consecutive quarters since peaking in 2013, URA data shows.
The Urban Redevelopment Authority’s (URA) flash estimates of a 1.5 percent drop in private home prices came as a surprise to analysts and erased hopes that the market may be bottoming out following several quarters of mild price declines, reported The Business Times.
Some analysts attributed the price declines, particularly of high-end homes within the city centre, to the recent move by the URA to include net prices of housing units sold from delicensed projects.
Delicensed housing projects have received their Certificate of Statutory Completion, with individual strata titles already issued to buyers. Previously, the URA did not require these projects to submit price transaction information. As such, the URA computed their prices based on other sources like stamp duty submissions. Some property consultants, however, believe that these may be slightly inflated.
Under the new rule, developers are required to strip out any rebate, discount, allowance, reimbursement, voucher, benefits and payments before submitting the net prices of the units sold. This is the first time URA data has included the net prices of housing units in delicensed projects.
Nicholas Mak, Executive Director at SLP International, believes the new rule contributed to the large drop in home prices in the Core Central Region (CCR) and Rest of Central Region (RCR).
Home prices in the CCR fell 1.8 percent, after increasing by 0.3 percent during the previous quarter, while RCR prices dropped 1.3 percent after posting an increase of 0.2 percent in Q2.
“As most delicensed projects which offer incentives and discounts are located in the CCR and some in the RCR, this has contributed to the relatively sharper fall in prices of non-landed properties in these regions . . . In the current market, such a change could result in a one-off larger than normal decline in the price index,” said Mak.
Not everyone, however, agrees.
Savills Singapore Research Head Alan Cheong noted that the new price reporting rule does not explain the equally severe price decline registered in the Outside Central Region (1.2 percent) and the landed housing segment (2.2 percent), considering that there were few and no delicensed projects within these respective segments.
“What has been surprising is not the direction that the index adopted, but the re-acceleration of the rate of price decline. For the quarter in review, all three regions registered price falls of well over one percent, which on a quarter-on-quarter basis, is a significant change.
“There will be a lot of variation and noise in this recovery, because the price trend line is so gentle that there will be more noise (than usual) and the market will see-saw,” said Cheong.
This is the 12th consecutive quarter of overall price declines seen in the property market, the magnitude of which is also the greatest over this period. Private home prices have fallen 10.8 percent since Q3 2013.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
