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Prices Grow Sustainably In “Sober” Market

The Managing Director of the Monetary Authority of Singapore (MAS), Mr Ravi Menon, commented on Singapore’s real estate market and the much-discussed cooling measures recently at a press conference on the release of MAS’ annual report on 27 June.

Mr Menon said that Singapore’s property market is now “more sober” after the introduction of cooling measures in July of 2018, and that there were early signs of slower price increases and lower transaction volumes.

He added that the measures still need time to work their way through and there is no need to shift gears significantly at this moment, citing that “there seems to be good balance that’s holding up the market”.

Mr Menon said that the measures, which included the increasing of the Additional Buyer’s Stamp Duty (ABSD) and the tightening of the loan-to-value (LTV) limits on residential property purchases, were aimed at cooling a property market that was “showing signs of potential over-heating”.

Singapore’s private residential prices had increased by 9 per cent over four quarters between the third quarter of 2017 and the second quarter of 2018. Mr Menon said that there was a real possibility that similar to 2013, the property price increases would “run ahead of economic fundamentals”, and if a renewed property bubble had formed, there would be a risk of a destabilising correction later that would hurt not just households, but also businesses and banks. The risk was more pertinent, considering that there was a strong pipeline of private housing supply coming on stream over the next few years.

As such, authorities decided to "act early and decisively to restrain the property market" and since then, the measures have helped to moderate the property market cycle.

Since the end of the second quarter of 2018, private residential price increases have eased significantly and average transaction volumes have fallen by 30 per cent. Bids for land tenders, in both the en bloc sale and Government Land Sale markets, have also become more realistic.

Mr Menon took care to clarify that the Government’s aim is not to depress property prices. The Government also do not have a target rate of increase for property prices. Nevertheless, the Government has a role to help ensure that price movements are broadly consistent with economic fundamentals.

He summarised the discussion by saying that it was not sustainable to have property prices increasing at double digits while the economy was growing at around 3 to 5 per cent in nominal terms, but also concluded by saying that the Government will continue to monitor the property market closely and stands ready to help ensure a healthy and sustainable market.

Private Residential Price Index Moves North

Perhaps proving that the Singapore market is indeed a sustainable one, the most recent flash estimates for Q2 2019 private residential price index released by the Urban Redevelopment Authority (URA) showed that Singapore property prices have increased and have in fact hit a five-year high.

Following two consecutive quarters of price decreases, the price index is now up 1.3% q-o-q, compared to a 0.7% fall in Q1 2019. All three segments, from Core Central Region (CCR), Rest of Central Region (RCR) and Outside Central Region (OCR), recorded positive changes in Q2, marking a complete reversal of the trend in the first quarter of 2019.

Q2 2019 saw more new projects launched compared to Q1 2019, which translates to a higher sales volume of around 2,100 units (up till 23 June 2019).

The increase in prices we see in Q2 2019 are most likely due to new launches during the quarter as well as more transactions from the high-end market, such as from Boulevard 88, 3 Cuscaden, Juniper Hill, Amber Park and Riviere.

Looking at the second half of 2019, anticipated new launches include EDEN by Swire Properties at Draycott Park, as well as Haus on Handy, Kismis View, Avenue South Residences, Cuscaden Reserve, Nouvel 18 and Parkwood Collection which is a collection of landed homes.

Greater Interest In Luxury Penthouses

Affirming the fact that luxury is leading the price recovery in Q2 2019, there has been a slew of news that luxury penthouses in the prime districts of Singapore have been moving. These include an 11,098 sq ft, triplex penthouse at Boulevard Vue, by Far East Organization, which was sold for 52 million to a buyer who is believed to be a Chinese national. That sale also meant that all 28 apartments in Boulevard Vue have been sold.

Over at Boulevard 88, a 6,049 sq ft penthouse was sold for $31 million, marketing the highest price per sq ft for a penthouse since a super penthouse at Sculptura Ardmore was sold for $60 million or $6,000 per sq ft two years ago. The latest deal at Boulevard 88 was the last of the four penthouses in the 154-unit luxury condo sold to date.

Another penthouse that was sold recently was a 6,555 sq ft penthouse at 3 Orchard By-The-Park.

Click here to read the latest research report on penthouses and super penthouses by List Sotheby’s International Realty, Singapore.