After five quarters of growth, overall private home prices fell marginally by 0.1% quarter-on-quarter (QOQ) in Q4 2018, as the cooling measures implemented in July continued to depress home values. This is the first quarterly decline since Q2 2017 where home prices dipped by 0.1% QOQ from Q1 2017. Based on caveats downloaded, overall transactions (excluding ECs) in Q4 2018 fell 36% QOQ to 3,515 units. 

For the whole of 2018, private home prices rose by 7.9% - with most of the increase achieved in the first half of the year - in line with Colliers’ expectation of an 8% growth for the year. 

The price decline in Q4 2018 was led by the Landed Property and Core Central Region (Non-Landed) segments where values fell by 1.8% and 1.5% respectively. We believe the drop in Landed Home prices could be due to the higher base in Q3, during which landed home price index climbed 2.3% QOQ, compared to the flat growth in non-landed homes then. During Q4 2018, Belgravia Green was the top seller and the only major landed property launch with 34 homes sold at a median price of SGD862 psf per strata area. Median price quantum per landed home has remained relatively stable at SGD2.8-3.0 million since Q1 2015.  

Core Central Region (CCR)

Prices of non-landed private residential properties declined by 1.5% in the CCR, compared to the 1.3% increase in the previous quarter. The decline could be attributed to a higher base set in preceding quarters and the slower transactions as investors paused to contemplate the incremental taxes. 

We note that prices at the new launches are still holding up -- 3 Cuscaden and 10 Evelyn were the only new CCR launches in Q4. 3 Cuscaden sold 24 units at a median price of SGD3,545 psf while 10 Evelyn sold two units at a median price of SGD2,478 psf. For projects that were launched earlier - 120 Grange sold another two units at a median price of SGD3,318 psf, 8 Saint Thomas sold 19 units at a median price of SGD3,254 psf, while New Futura (which was launched in Q1 2018 and has seen stellar takeup since) still achieved an average price of SGD3,757 psf compared to an average of SGD3,436 psf recorded in the first three quarters of 2018. 

With more and larger projects to be launched in 2019, we expect exciting concepts and potentially benchmark pricing in localities that have not seen major launches for an extended period of time. 

Rest of Central Region (RCR)

In contrast, prices in the RCR strengthened by 1.8%, after posting a decrease of 1.3% in the previous quarter. Projects that were launched in November contributed to the price growth in Q4. These were Arena Residences, Kent Ridge Hill Residences, Parc Esta and The Woodleigh Residences. These launches achieved good takeup rates at median prices of SGD1,820, SGD1,714, SGD1,699 and SGD2,002 psf in Q4 2018 respectively. 

In 2019, we expect RCR to see fewer launches than in 2018, with key ones such as the 1,101-unit Silat Avenue, redevelopment of Pearl Bank Apartments, and Normanton Park. Prices are expected to be relatively stable given the steady sales clocked at the 2018 launches such as Park Colonial, Stirling Residences and Parc Esta but which still have significant stock to sell.  

Outside Central Region (OCR)
Meanwhile, home values in the OCR climbed by 0.8% in Q4, following a 0.1% decrease in the Q3 2018.  Prices were held up by large launches that have been put on the market in Q4 2018 and earlier. The key contributing projects were: Affinity at Serangoon, Riverfront Residences, Le Quest and The Jovell which saw stable to marginally improved median prices of SGD1,498, SGD1,320, SGD1,426 and SGD1,335 psf respectively. 

In 2019, we expect several large launches such as the 2,225-unit Treasure at Tampines and 1,410-unit The Florence Residences in the OCR. Given the sheer size of the projects and potential competition, we expect them to be priced competitively and still offer compelling themes. We expect OCR to see some pricing pressure through 2019. 

Outlook
Colliers estimates that overall private home prices could potentially climb by 3% in 2019, in line with the economic growth – barring any unforeseen events. 

Supply side factors will be supportive of prices given: a) the completions for the next few years will be below historical average; b) the land rates at which the developers have acquired sites via the collective sales and public land tenders are indicative of at least the current market prices; and c) developers are unlikely to cut prices unless they are under extenuating circumstances. 

Meanwhile, demand side factors such as household income growth, job security, household formations are likely to be positive for private housing. That said, one key area to watch this year is the pace of interest rate hikes which will likely weigh on home buying interest should they escalate sharply. 

For the end-buyers, we think it is conceivable that the market sentiment will likely maintain status quo in the first half of 2019 as the property curbs continue to moderate investment demand for private homes. Barring external shocks – such as the worsening of the US-China trade spat, messy Brexit, and heightened geopolitical tension - the Singapore economy is expected to chug along steadily in 2019, and this should still drive owner-occupier and upgraders’ demand, who are less or not affected by the curbs.

For the developers, given the sizable supply pipeline from public land tenders and private collective sale sites accumulated before the curbs, they are likely to be more cautious and may pace out their launches to ensure the market remains sustainable in 2019. By the middle of this year, with the relatively healthy takeup since the curbs, and assuming a benign economic outlook, developers could be more active in landbanking again.