Commentary on URA Q2 2020 Private Residential Statistics

Xian Yang Wong • 28/07/2020

Private residential prices rose by 0.3% qoq in Q2 2020, differing from earlier flash estimates of -1.1% qoq. The change in trend can be attributed to increased sales activity post circuit breaker in June, after two consecutive months of muted sales in April and May. As expected, Q2 2020 volumes fell to 2,664 units, which translates to a fall of 37.6% qoq and a fall of 44.1% yoy.

The rise in prices can be attributed to the CCR and the OCR, which both rose by 2.7% qoq and 0.1% qoq. On the other hand, RCR fell by -1.7% qoq. However, the rise in prices this quarter may be skewed towards new sales due to the unique circumstances of the circuit breaker where movement was restricted and property viewings could not be carried out. As such, resale volumes plunged in Q2 2020, and sales was dominated by new sales which took up 64.3% of total Q2 sales. The proportion of new sales over total sales in Q2 2019 was only 49.4%. New launches tend to be priced at a premium over the resale market due to their lower quantum (smaller size) and new fit-outs.

Private residential rents fell by 1.2% qoq, as landlords lowered their rental expectations given the unique circumstances of the circuit breaker. Nonetheless, occupancy rates remained stable at 94.6%. We expect rents to continue to fall for the rest of 2020. Although new supply remains tight, rental demand is expected to fall amidst rising unemployment rates, on-going travel restrictions and companies focusing on cost containment.

Going forward, prices are expected to trend lower, albeit at a gradual pace as market activities return to norm amidst weakening market conditions. Given ample government support, we do not foresee widespread fire sales, although opportunistic deals may surface as some owners wish to free up cashflow. Most developers have healthy balance sheets and do not face pressure from ABSD deadlines in 2020 and 2021. The circuit breaker measures may also allow them to seek for an extension of ABSD deadlines. This would allow them to better manage their unsold inventory and manoeuvre through this challenging period. 

The long term fundamentals of the Singapore private residential market remain unchanged, and the Singapore private property market is still viewed favourably by both local and foreigners. Many are waiting on the sidelines for prices to correct further. As such, we expect prices to fall by -6% to -3% for the whole of 2020.


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