Singapore government see signs of speculation in private property market

The government is seeing some signs of speculation in the Singapore property market, according to National Development Minister Mah Bow Tan. He added that it is uncertain if the buying momentum seen in recent months can be sustained.

"The forecast is still for negative growth this year. Although it's not as negative as it was in the beginning of the year. I think there is still uncertainty... But what is important really is for all of us, all the players in the market, to make sure that the market remains healthy," said Mr Mah.

The Urban Redevelopment Authority’s (URA) quarterly statistics indicate that the fall in the private residential prices has decelerated sharply from 14.1% qoq in 1Q09 to 4.7% qoq (flash estimate: 5.9%) in 2Q09. At 133.3, the price index is 26.5% below the peak levels reached during 2Q96.

Residential property prices making a U-turn. Even though the price index is showing a 4.7% qoq decline in the private residential property price levels, actual prices have advanced by 5-8% qoq in 2Q09. We expect the 3Q09 price index to reflect the turn in the property prices. The lag effect in the price index is due to the normalisation procedure used in its computation. On the other hand, public housing prices, as indicated by the Housing Development Board’s (HDB) price index, have already made a U-turn in 2Q09, advancing 1.4% qoq (flash estimate: 1.2%) to an all-time high of 140.2 (2.4% above the peak levels of 4Q96). The stable public housing prices will lend support to the private housing price levels.

2Q09 developer sales volume exceeded the full-year sales last year. The developer sales volume of 4,714 units in 2Q09 alone had exceeded the 4,370 units sold for the whole of last year and it is the best quarterly showing in two years since the sale of 4,820 units at the height of the property boom in 2Q07. The secondary sales volumes also surged nearly three times qoq to 3,059 units. Sub-sales more than doubled qoq to 940 units, accounting for 11% of all transactions.

Singaporeans account for the bulk of developer sales but foreign buyers are coming back. While foreigners snapped up 401 units in 2Q09, +32 % qoq, Singaporeans still accounted for the bulk 85% of the developer sales in 2Q09. However, our recent visits to developers indicate a rising trend of foreign buyers. predominantly Malaysians, Indonesians and Chinese.


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