Singapore, March 17th 2008 - Cautious sentiments continue to loom over the private non-landed residential market. On a monthly basis, total islandwide new launches and take-up for non-landed properties in February have declined. A total of 343 units were launched in February, some 13.4% lower than in January. Consequentially, 163 units were sold in February – a 43.2% drop from that in January, which is also the lowest monthly transaction recorded since the series started in August 2007.
Buckling this trend is the Rest of Central Region which recorded both strong launches (107 units – an improvement from the previous month of 36 units) and take up (64 units, up from the 49 units in January). The stronger launches came from projects within RCR such as Cosmo (45 units), The Adara (16 units) and Tropics@Haigsville (11 units).
Table: Number of Units Launched
Source: Jones Lang LaSalle Research, URA Monthly Statistics
(Number in parenthesis excludes bulk purchases by private funds)
Table: Number of Units Sold
Source: Jones Lang LaSalle Research, URA Monthly Statistics
(Number in parenthesis excludes bulk purchases by private funds)
Although the volume of transaction islandwide has contracted, prices in general were comparatively stable. Using just the lowest median prices category, as it is more reflective of the underlying market sentiments, median prices decline marginally between 0.7% and 5% m-o-m basis. Only RCR has shown any improvement - increase to $874 per sq ft in February. Prices in general are stabilising amidst the subprime woes and a volatile stock market. The weak market sentiment is not as evident in prices as compared to the volume of transactions as there are still strong underlying demand by en-bloc buyers and high net worth individuals seeking homes.
Table: Lowest Median Prices
Source: Jones Lang LaSalle Research, URA Monthly Statistics
(Note: the tracking of highest median prices within the three regions have excluded developments with singular transactions)
More Realistic Pricing
Looking at the buyer’s buoyancy among the three regions, the level of buyers’ bullishness has contracted in both CCR and RCR. The buyer’s buoyancy 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 buyers’ confidence level. The smaller the spread, the lower is their optimism. 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 buyers’ mood and confidence.
In particular, buoyancy level in OCR is the only region that maintained its January reading of 0.7. This reflects a sustained buyers’ optimism of projects in this district as compared to RCR and CCR. This confidence is supported by the lower unit price band of developments in the OCR which is highly attractive to cash rich en-bloc residents seeking replacement homes.
Table: Gap Analysis For The Three Regions
Source: Jones Lang LaSalle Research
Dr Chua observes, “Given the uncertain extent of the impact from US subprime debacle on the global financial market, market sentiments in Singapore private residential market is likely to remain conservative. Prices for RCR and OCR are expected to remain relatively stable over the course of next three months, supported by the demand of displaced residents of collective sales.”