1H 2016 Singapore Property Market Review

DREA Editorial Team

drea-editorial

Executive Summary

  • 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