The Singapore Property Market is softening under controlled cooling measures
However, regulators do not think it is time yet to pull back on these measures
Local interest rates have remained low for a long time but are starting to creep up; forward SIBOR suggest rates will be 0.6% higher in 3-mths time
Buyer demand seem to have recovered; for the first 6 months of 2016 (“1H16”), private non-landed residential transaction volume is up 12% compared to the same period last year
Transaction volume is largely driven by developer sale (59%) and demand is highest for 500-1000 sqft units
Despite cooling measures, median per-square-foot prices for 500-1000 sqft units have increased in 18 out of 26 districts profiled
However, we continue to see more units being sold at a loss, 12% of resale units sold in 1H16 were at a loss of >5%; about of which were in D9,D10,D15
The proportion of loss making resale transaction has increased for 4 straight years now, as more and more people are ‘cutting loss’ and selling out
We estimate there are ~17,200 unsold units outstanding in the new launch market today and expect some pricing pressure from the supply overhang
While absolute household debt levels have increased, this has been supported by income growth; other consumer debt metrics also seem to have improved over the recent years
With housing non-performing loans at <1%, we do not see material downside risk in the housing market arising from mortgage defaults in the near term
Overall, this continues to be a buyer’s market and despite some near term supply headwinds, the market remains healthy under prudent regulation
