Private condo prices down 0.5% in Q1: URA

Lower condo prices in CCR may have been due to lower median price sales at The M.

The overall private residential property index decreased by 0.5% QoQ or 1.8 points to 151.8 points in Q1 compared to 153.6 points in Q4 2019, according to the Urban Redevelopment Authority’s (URA) flash estimate of the price index.

Private condo prices in the core central region led the declines with a 1.5% QoQ fall in Q1 2020, slower than the 2.8% decline recorded in the previous quarter.

The fall in CCR prices may have been influenced by sales at The M, which sold 389 units at a median price of $2,439 psf in Q1 2020, noted Wong Xian Yang, Cushman & Wakefield’s senior manager, research, Singapore and Southeast Asia. This is lower than other CCR launches that typically sell above $2,800 psf.

Prices in the rest of the central region (RCR) contracted by 0.5% in Q1, compared to the 1.3% decrease in the previous quarter. Meanwhile, private condo prices in the outside central region (OCR) narrowed by 1% during the same period, compared to the 2.8% increase in Q4 2019.

The overall contraction of the index may have come from sellers willing to lower profits in the bid to offload property, noted Huttons’ director for research Sze Teck Lee.

“As economic and employment conditions were not dire in 1Q 2020, sellers of completed homes in the mass market and landed segment most likely opt to accept lower profits in a bid to offload their property, pushing the price index down,” Lee said.

However, the narrower declines in non-landed homes in CCR and RCR may be a sign of stabilisation of prices in these two regions, he added.

Buyer sentiments were also affected by worries about the impact of COVID-19 and weaker economic growth in 2020, added CushWake’s Wong. But on a yearly basis, overall property prices are still up 2.2%.

Going forward, CushWake’s Wong expects condo prices to trend lower as Singapore heads into a recession.

“Buying sentiments are expected to remain muted over the short term until uncertainty in the labour market eases. However, prices may prove to be more resilient as compared to previous recessions. For example, during the Global Financial Crisis, overall property prices fell by 24.9% over four consecutive quarters,” noted Wong.

In contrast, OrangeTee & Tie’s head of research and consultancy Christine Sun does not expect “dramatic" price corrections in the coming months.

“Many property measures have already been put in place over the past years to ensure financial prudence among buyers. The possibility of many homeowners slashing prices or defaulting on housing loans is not high. Deep-pocketed developers may not see a need to adjust prices drastically now as their balance sheets are still relatively healthy,” said Sun.

“The property market will likely keep afloat as long as unemployment remains low and people are able to service their mortgages,” she concluded.