SINGAPORE, 15 May 2008 - Alongside a moderated growth of 3.7% in the overall Property Price Index (PPI) in 1Q08, developers across the island have further contracted their supply by some 64.9% month-on-month basis. The islandwide supply of non-landed homes (excluding executive condominiums) in the month of April dropped to 222 units from 632 units in March. The majority of this supply came from Outside Core Region (OCR) with projects located in the East Coast region dominating. Demand, interestingly, has been equally strong with 209 units being absorbed.
Generally demand for entry level projects remain spatially biased towards the East Coast area except for only particular project which deserves noting. Stadia at Yio Chu Kang (near Serangoon Stadium) stood out from the rest with over 90% of the units launched being taken up. The Lakeshore at Jurong West also saw another 32 units being purchased last month, giving it a take up of about 77% to date. It would appear that upgraders may be returning, with entry level projects that are moderately priced between $750 to $850 psf as the preferred choice. Reflecting this buying sentiment is the volatility level. The volatility is a measurement of how wide market prices are per unit dollar of the median price achieved in that district. In some ways, it reflects the markets’ speculative level. This method of analysis does not account for the product differentiation or any other physical attributes that may have resulted in the gap in median prices achieved in each development. This parameter should not be used to predict the market movement but only as an indication of the market’s mood.
Based on Jones Lang LaSalle analysis, in the OCR for every dollar of median price, there is about 17
cents worth of market pressure that is pushing the median price either higher or lower. This volatility
has increased from the 14 cents recorded in March. Median Prices (low) continues to soften further
by 4.2% on the back of soft market sentiments.
In the Core Central Region (CCR), the supply remains dry. Only 3 units were released from existing
projects namely Parc Centennial at Kampong Java Road and Scotts Square by Wheelock at Scotts
Road. Developers in the CCR remain the most conservative over the market sentiments and this is
unlikely to change in the short term given that the current market demand remains fragmented and
weak. Despite a strong showing of 19 units absorbed (as compared to only 3 units launched) within
the CCR, the largest volume of 4 transactions was recorded by Zenith at Zion Road, while the
remaining 15 were mostly individual unit located in different projects. Reflecting this weakening
sentiment is also the low volatility of only 2 cents for every unit median dollar, compared to 10 cents in
March, although Median Prices (low) have remained relatively stable.
Finally, in the Rest of Central Region (RCR) only one project – Kent Residences dominated the new
supply market with their release of 11 units in April. Likewise, the market continues to absorb the
supply overhang from previous months, with no single projects enjoying any large take up. Demand in
the RCR is similar to that in the CCR, where it remains fragmented and weak.
Dr Chua Yang Liang, Head of Research, South East Asia observes, “latent demand remains strong
especially for the mass market projects that are reasonably priced between $750 to $850 psf. The low
volatility in median prices (i.e. fewer speculators) of projects in the CCR suggests that market activity
and future prices in the high end market are likely to maintain stable.”