Prices of private residential properties in Singapore fell for the second straight quarter, dipping by 0.6% in Q1 2019 from the previous quarter, according to flash estimates released by the Urban Redevelopment Authority (URA) on Monday (1 April). The price decline was steeper than the 0.1% drop recorded in Q4 2018.

The fall in private home values in Q1 was generally unsurprising amid the weaker market sentiment that carried through from the end of last year, following the implementation of fresh cooling measures in July. With the two straight quarters of price drop, overall private home prices are now 0.7% below the most recent peak in Q3 2018 and 3.8% below the all-time peak in Q3 2013. 

Based on caveats downloaded, overall transactions (excluding Executive Condos) in Q1 2019 fell 16% quarter-on-quarter (QOQ) and 47% year-on-year (YOY) to 3,215 units. The Outside Central Region segment (non-landed) bucked the trend as transactions picked up 5% QOQ to 1,535 units, with progressive takeup in large launches, in particular those near the Cross Island Line stations, announced during the quarter. 

Core Central Region (CCR)
According to URA’s data, the CCR led the price decline in Q1, falling by 2.9% from the previous quarter. This is the sharpest quarterly price decline for the CCR segment since the 5.2% fall in Q2 2009, during the aftermath of Global Financial Crisis. This is also the second consecutive quarter of decline, bringing total decline to 3.9% since its recent peak in Q3 2018. 

The decrease in Q1 non-landed CCR prices was much steeper than our expectation. A closer look at the transactions during the quarter suggests that the decline in median prices for certain projects could have contributed to the sharper drop as developers seek to clear inventory in ongoing launches. These included: 3 Cuscaden; Marina One Residences; Martin Modern; New Futura; South Beach; and TwentyOne Angullia Park.  

In addition, as transactions continue to dwindle in CCR, owing to the impact of cooling measures on investors, it is likely that any price movements would be amplified. That said, we note that some projects that launched in Q1 2019 had achieved benchmark pricing, including Fourth Avenue Residences, RV Altitude and Boulevard 88.   

Rest of Central Region (RCR)
Meanwhile, non-landed home prices in RCR fell by 0.2%, overturning the 1.8% increase in the previous quarter. Prices appear to be stabilising, after the uptick that arose from good performances in new launches such as Arena Residences, Kent Ridge Hill Residences, Parc Esta in Q4 2018. 

We see some earlier launches such as Margaret Ville and Mayfair Gardens moving more units in Q1 2019 versus Q4 2018 as median prices dropped marginally, while launches that have consistently done well, such as Parc Colonial, Stirling Residences continued to maintain prices. 

Outside Central Region (OCR)
Non-landed home values in OCR was flat, following the 0.7% increase in the previous quarter. OCR prices continued to be resilient, given the boost in sentiment from the Cross Island Line announcement which helped developers hold onto prices. Projects such as Affinity at Serangoon, Gardens Residences and Riverfront Residences continued to do well. 

Outlook
Despite two straight quarters of decline in the URA private residential property price index, we think it is too premature to conclude that prices will continue to head south from here on. We note that the launch pipelines could also ease going forward as most of the bulky ones have been launched or being launched.  

Colliers Research is maintaining its forecast of a 3% growth in private home prices for the whole of 2019. Supporting factors that could hold up prices in the coming quarters include: halt in interest rate increases, continued benign economic growth, and en bloc beneficiaries buying replacement homes.