Residential Real Estate (Singapore)

Group Research08 oct 2019
Photo Credit - AFP

Price Trends

2Q19 PPI spiked by 1.5% q-o-q, wiping out 2 quarters of decline, resulting in a 0.7% increase since the recent peak in 3Q18.
Since the implementation of additional property cooling measures, Singapore’s Property Price Index (PPI) spiked in 2Q19 by 1.5% quarteron-quarter (q-o-q), wiping out two quarters of decline (-0.7% cumulative). The increase was largely driven by price index for non-landed properties which rose 2.0% q-o-q, while landed properties fell marginally by 0.1% q-o-q. Analysis by region showed that prices in all three regions have increased, mainly led by the central region. Rest of Central Region (RCR) rose 3.5% q-o-q, followed by the Core Central Region (CCR) (+2.5% q-o-q) partially supported by new launches, including Amber Park and Sky Everton. Prices for properties Outside Central Region (OCR) remained resilient with prices increasing by 0.4% q-o-q.

PPI continue to rise despite additional cooling measures, negating the initial decline. Despite the additional cooling measures and initial decline in prices, PPI increased 0.7% cumulatively since its first decline in 4Q18. Effectively, the index improved by 10% (cumulative) since 3Q17. The rise was largely contributed by non-landed properties, where we saw prices increasing by 1.4% since 3Q19, possibly led by new property launches. However, prices for landed properties fell 1.0% despite recent news of a number transactions which could be due to timing in recognition. Analysis by region showed that prices for properties in the CCR fell 1.8% cumulatively from its recent peak, while prices for properties in the RCR and OCR remain resilient, improving by 4.6% and 1.3% respectively. Given that PPI did not moderate but increase, we are cautious that the government could be taking further steps should the PPI continues its upward trend.


1H19 sales volume fell 37% y-o-y; holding up better than expected. In 2Q19, sales volume jumped 27% q-o-q after 3 quarters of lacklustre sales in both primary and secondary segments. However, on a year-on-year (y-o-y) basis, sales volume fell 40%, mainly led by secondary transactions (-50% y-o-y) and limited Executive Condominium (EC) transactions. Primary sales remained relatively flat (-1% y-o-y). While sales volume has dropped significantly (-37% y-o-y to 8.5k units), the number of units sold at 8.5k units are holding up better than expected, especially in the primary sales. The drop in sales volume was largely due to the halving of secondary sales. EC transactions remained weak, due to a lack of unsold inventories and new launches.


Pipeline supply of private residential units starts to moderate gradually as units are launched and sold progressively.
Pipeline supply of private residential units remains at 56k units, given the slew of new property launches since 2017. Approximately 65% of the pipeline supply is under construction while the remaining 35% is still under planning. The unsold inventory has fallen marginally to 39k units, as compared to 41k units in 1Q19. Following the numerous property launches this year, the number of units expected to be launched within the next 1-2 years has fallen to 29k units from 40k units, reducing the pipeline supply gradually as sales continue to move. Most of these units are expected to be completed in 2022 and 2023 (34% and 27% respectively).


Rental rates increased 2.3% in 1H19 in tandem with improvements in vacancy rates. The 2Q19 Residential Rental Index (RRI) increased further by 1.3% q-o-q, a lagged impact from vacancy rates falling to 6.4% in 2Q19 from the peak of 8.4% in 3Q17. Rental rates have increased 2.3% cumulative in 1H19 and 2% since 3Q17 where vacancy rates peaked. Both landed and non-landed residential homes saw rental rates increase further by 0.3% and 1.4% in 2Q19 and 0.5% and 2.5% in 1H19 respectively. Rentals from all regions increased between the range of 1.2% q-o-q to 1.5% q-o-q in 2Q19.

Vacancy rates remained relatively stable, between 6.3% to 6.4% since 4Q18. We continue to believe that vacancy rates could continue to improve in the near term, with completions possibly easing off in the next 1 to 2 years due to fewer property launches in the past 3 to 4 years, coupled with more en-bloc properties being redeveloped. We may see further gradual improvement in rental yields as new supply completes mainly from 2021 to 2023.

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