The drop in private home prices wasn’t surprising considering the weaker market sentiment following the introduction of new cooling measures last year, said analysts.
Private home prices fell for the second straight quarter, dropping 0.6 percent in the first quarter of 2019 from the previous three-month period, according to the Urban Redevelopment Authority’s (URA) flash estimates released on Monday (April 1).
The fall in private home prices is “generally unsurprising” given the weaker market sentiment following the introduction of new cooling measures in July, said Tricia Song, head of research for Singapore at Colliers International.
In fact, caveats registered to-date in URA Realis showed that there were 3,215 transactions of private homes in Q1 2019, a sharp 40 percent year-on-year decline from the 5,328 units seen in Q1 2018, noted Ong Teck Hui, senior director of research and consultancy at JLL Singapore.
“Buyers have become more cautious and selective and not in a hurry to purchase, as prices are easing and the significant supply in the sales pipeline would be offering more options to consider,” he said.
The Core Central Region (CCR) led the price decline, falling 2.9 percent from the previous quarter or the sharpest quarterly decline since Q2 2009 when prices fell 5.2 percent.
The Rest of Central Region (RCR) saw prices dip 0.2 percent, while prices in the Outside Central Region (OCR) were unchanged.
Meanwhile, resale prices of HDB flats also continued a downward trend, declining 0.3 percent quarter-on-quarter to 131 in the first quarter of 2019.
Eugene Lim, key executive officer at ERA Realty Network, noted that the drop is similar to the 0.2 percent decrease registered in the preceding quarter.
“The concern of depleting leases of older resale HDB flats was in the spotlight earlier this year. However, PM Lee has addressed this concern in his National Day Rally speech, where VERS and the new HIP programmes were introduced. In this regard, we have not seen an immediate impact on resale flat prices,” he said.
Over the long term, however, Lim expects a change of mindset towards older HDB flats as the policies start to be implemented.
With this, he expects this year’s HDB resale demand to be resilient as an estimated 27,000 flats reach the minimum occupation period and the cooling measures’ side effects drive more buyers on a tighter budget to the HDB resale market.
Some en bloc beneficiaries may also choose to downgrade to HDB flats to keep more funds for other uses.
HDB also announced that it will offer around 3,400 Build-To-Order flats in Tengah, Woodlands and Kallang Whampoa next month. It will also hold a concurrent Sale of Balance Flats exercise.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email email@example.com