Resale transactions for non-landed private residential units fell 7.5% m-o-m in May while prices dipped slightly to mark a 17-month low since December 2012, according to the Singapore Real Estate Exchange (SRX) in a flash report on June 9. An estimated 421 transactions were registered in May, down from the 455 in April. This is a 42.6% drop from the 734 units sold in the resale market last year.
“Buyers may have diverted their attention to hot new projects that were launched by developers at attractive prices such as Commonwealth Towers; as well as projects re-launched by developers at lower revised prices such as Sky Habitat,” says Eugene Lim, ERA’s key executive officer.
Overall, resale prices dropped 0.3%, with the prime districts in the Core Central Region (CCR) leading the drop at 2.9% and the suburban areas or Outside Central Region (OCR) seeing a 0.3% drop. Meanwhile, prices in the city fringe or Rest of Central Region (RCR) inched up by 0.6%.
Resale prices have continued to fall as sellers have become more realistic with their pricing and are willing to adjust prices in the face of reduced demand. The gloom in the private resale market is expected to persist as the cooling measures and total debt servicing ratio loan framework continue to constrain buyers’ budgets and ability to purchase.
Not surprisingly, it was homes in the CCR, which are on the higher price band, that proved to be a drag on the overall resale prices, says Lim. Prices of homes in the CCR are also affected by the ample stock of unsold units by developers, who have seen demand hit by the higher additional buyer’s stamp duty and weak leasing demand. Homes in the RCR have bucked the trend, and continue to see leasing demand as they are located at the city fringe, and prices are also less expensive than prime properties in the CCR.
A total of 3,120 apartment leasing transactions took place in May, which was 3.7% higher than April’s volume of 3,010 units. On a y-o-y basis, rental volume has improved by 7.9% from the 2,891 rental contracts signed in May last year, according to ERA. The increase in rental volume is also attributed to landlords being more realistic, and willing to drop asking rents in order to secure tenants. “It’s now a tenant’s market,” says Lim. The increase in the number of projects being completed has also led to a more vibrant rental market as tenants seek to upgrade to newer properties.
However, rental rates were down 0.8% in May compared with April, based on the non-landed private residential rental sub-index. Compared with the peak rental rates observed in January 2013, rents in April had already fallen by 6%. It looks like the fall in rental rates were driven mainly by condos/ apartments in the suburban areas or OCR, which saw a 1.7% drop. However, rental rates in the CCR and RCR increased by 0.2% and 0.6% respectively. As more new stock enters the market, and the foreign labour force continues to drop, this will put greater pressure on rental rates.
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