Industry / Real Estate

Residential Real Estate (Singapore)

Group Research / November 26, 2019

Photo Credit - AFP

Price Trends

3Q19 PPI continued on the rising trend (+1.3% q-o-q), reaching close to the last peak in the past cycle in 2013.
Singapore’s Property Price Index (PPI) in 3Q19, continued on a rising trend, inching up 1.3% quarter-on-quarter (q-o-q), after it spiked in 2Q19 by 1.5% q-o-q. As such, PPI is now close to the highest peak in the 2013 property cycle. The increase was largely driven by price index for both landed and non-landed properties which rose 1.0% q-o-q and 1.3% q-o-q respectively. Analysis by region showed that prices in all three regions continue to rise, mainly led by the central region. Core Central Region (CCR) (+2.0% q-o-q) followed by the Rest of Central Region (RCR) rose 1.3% q-o-q, partially supported by new launches, including One Pearl Bank, Avenue South Residences, and Cuscaden Reserve. Prices for properties Outside Central Region (OCR) saw a larger increase of 0.8% q-o-q.

PPI continue to rise despite additional cooling measures, cautious on government’s next steps.
Despite the additional cooling measures and initial decline in prices, PPI increased 2.1% cumulatively since its first decline in 4Q18. Effectively, the index improved by 11.4% (cumulative) since 3Q17, with PPI now reaching close to the last peak in 2013. The rise was largely contributed by non-landed properties, where we saw prices increasing by 2.7% since 4Q18, possibly led by new property launches. However, prices for landed properties has been flat since 4Q18. Analysis by region showed that prices for properties in all region is higher than 3Q18 peak, led by RCR (+5.9%) followed by OCR (+2.1% y-o-y). CCR rose the least with 0.2%. 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.


9M19 sales volume fell 24% y-o-y but primary transactions could hit close to to FY18 levels of 9.9k units, better than expected.
In 3Q19, sales volume jumped 30% q-o-q, highest quarterly sales volume since 4Q18, mainly from primary transactions following the higher property launches (+78% q-o-q, including EC). On a year-on-year (y-o-y) basis, sales volume recorded positive growth mainly from primary transactions (+9% y-o-y) and Executive Condominium (EC) transactions (due to timing of launches). Despite the uptrend seen in the quarterly sales number, 9M19 sales volume was 24% y-o-y lower, mainly due to lower secondary transactions (-40% y-o-y). 9M19 primary transactions (including EC) was relatively flat (-2% y-o-y) to 7.9k units, but is holding up better than expected and could possibly reach close to FY2018 sales volume levels of 9.9k units, contrary to what we have initially expected.  


Pipeline supply of private residential units starts to moderate gradually as units are launched and sold progressively.
Pipeline supply of private residential units fell marginally to 55k units (56k in 2Q2019), given the slew of new property launches since 2017. Approximately 68% of the pipeline supply is under construction while the remaining 32% is still under planning. The unsold inventory has fallen further to 36k 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 32k units from 43k units in 4Q18, reducing the pipeline supply gradually as sales continue to move. Most of these units are expected to be completed in 2022 and 2023 (35% and 56% respectively).


Rental rates increased 2.4% in 9M19 in tandem with improvements in vacancy rates.
The 3Q19 Residential Rental Index (RRI) was relatively flat (+0.1% q-o-q), while vacancy rates continue to decline, falling to its lowest level since 2013 at 6.1% (vs the peak of 8.4% in 3Q17). Rental rates have increased 2.4% cumulative in 9M19 and 2.1% since 3Q17 where vacancy rates peaked. While non-landed residential homes saw rental rates increase further by 0.4%, non-landed homes rental rates fell 2.3% q-o-q in 3Q19; 9M19 +2.9% and -1.8% respectively. Rentals from all regions increased between the range of 0.8% q-o-q to 1.6% q-o-q in 3Q19 except CCR which fell 0.7%.

Vacancy rates fell further to 6.1% from 6.4% in 4Q18. We believe that vacancy rates could start to stabilise in the near term, as some projects start to complete in the next 1-2 years. We may see rental yields start to taper off again as new supply completes mainly from 2021 to 2023.


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