Fashion
Private home prices in Singapore fell and rents continued to soften in the last quarter of 2016 but a decrease in the number of vacant units suggests the market may be nearing a bottom.
According to Urban Redevelopment Authority (URA) statistics for the fourth quarter released Thursday, private residential property prices in Singapore fell 0.5% between October and December 2016, slowing from the 1.5% decline in the previous three-month period.
For the whole of 2016, private home prices fell 3.1%, compared with the 3.7% drop in 2015.
Meanwhile, rents for private homes declined 1.0% in the fourth quarter following a 1.2% fall in the previous quarter. For the year as a whole, rents slipped 4.0%, slower than the contraction of 4.6% in 2015.
Home prices in the city-state have trended downwards over the past three years as the government introduced a series of measures such as caps on mortgage loans and higher stamp duties to check soaring real estate values.
Residential prices have retreated more than 10% since they hit a peak in 2013, leading many to call for a relaxation of the curbs.
There were some signs in Thursday’s data that a recovery may be taking shape in the private housing market.
For instance, according to the URA data, the number of private residential units in the pipeline fell to 40,913 at the end of the fourth quarter, from 43,693 at end September. The vacancy rate for completed units decreased to 8.4% at end December from 8.7% at the end of the third quarter.
In addition, there were pockets of strength within the residential sector, particularly at the high end of the market. For example, prices of landed homes rose 0.8% during the fourth quarter, turning around from a 2.7% decline in the previous quarter.
Most people in land-scarce Singapore reside in high-rise apartment blocks and only the wealthy can afford landed property.
PropNex Realty, one of Singapore’s largest real estate brokers, said activity in Singapore’s residential market picked up in 2016 because prices dropped to levels that home buyers are comfortable with.
“Despite the uncertain economic outlook and impending interest rate hikes, we are expecting a price moderation in 2017 with possible (decline) of not more than 3%,” PropNex CEO Ismail Gafoor said.
Turning to the commercial property market, URA said office rents fell 1.8% in the fourth quarter compared with the decline of 1.1% in the previous three-month period. For the whole of 2016, office rents declined at a faster pace of 8.2% compared with the 6.5% drop in 2015.
As for shopping malls and other retail spaces, URA said rents declined 1.2% in the fourth quarter compared with the decrease of 1.5% in the preceding period. Rents fell 8.3% for the full year, which was more than twice the 4.1% decline in 2015.
Desmond Sim, head of CBRE Research for Singapore and Southeast Asia, estimates an additional 52,000 square metres of retail space was leased in 2016, which was short of the new supply of 75,000 square metres.
“Although the magnitude of the quarterly decline in Q4 2016 was lower than previous quarters, we expect rents to remain under pressure,” he said.
