Why is the Outside Central Region so price resilient?

It is the only region where private property prices might still be rising, and Colliers explains why.

As the hub for newest batch of mass-market projects, OCR is poised to buck the price decline trend sweeping the rest of the Singapore regions. Aggressive promotions targeted at budget-conscious buyers also boosted transactions in OCR, convincing them to purchase despite the introduction of burdensome Additional Buyer's Stamp Duty and prevailing economic uncertainty.

"URA’s flash estimate for 1Q 2012 shows a marginal decline of 0.1% in overall private property prices compared to a 0.2% increase the quarter before. This is the first decline since 2Q 2009 and after the continuing trend of price moderation for nine consecutive quarters," said Ms Chia Siew Chuin, Director of Research & Advisory, Colliers International.

"This should give comfort that recent Government property cooling measures, as well as the ramped up State land supply have worked to contain price growth. The quiet secondary resale market had contributed to the price decline but the very active primary market in the mass-market segment had mitigated the fall," she said.

"Particularly, the Outside Central Region (OCR) demonstrated a high level of resilience in the first three months of 2012, as it is the only market segment to record a price increase. The price index rose faster at 1.2% in 1Q 2012, compared to the 0.6% increase seen for the previous quarter and this marks the eleventh consecutive quarter of increase since 3Q 2009," she added.

"The sustained price increase is underpinned by robust demand for new mass-market projects that is fuelled by low interest rates and the continued availability of project launches. Creative promotions and sweeteners dangled by developers to cushion the impact of the Additional Buyer’s Stamp Duty (ABSD) have also enticed homebuyers to commit. With shoebox apartments featuring strongly in this quarter’s offerings, these units attracted homebuyers and investors with prudent budgets, drawing them in with relatively smaller and hence more affordable absolute price quantum," she said.

"As a result of the lack of market activity in the Core Central Region (CCR) and the Rest of Central Region (RCR), these two segments recorded price declines of 0.9% and 0.7%, respectively in 1Q 2012. The ABSD has had more bearing on these two regions, as foreign buyers, who are affected by the tax, form a larger buyer base and are likely to have held back on their purchases," she said further.