PERSPECTIVE. Private Residential (Landed) Market Review & Outlook. Prices continued to decline 2Q 2015

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1 PERSPECTIVE 2015 Private Residential (Landed) Market Review & Outlook Prices continued to decline Prices continued their decline in the second quarter of 2015, falling 1.0% quarter-on-quarter (QoQ) and 4.9% year-on-year (YoY). From their peak in, prices have fallen for seven consecutive quarters and they show no indication of halting their descent. Figure 1: Property price index of landed properties Median prices have remained very consistent in the terrace and semi-detached submarkets, but exhibit much more volatility in the detached segment. In 2015, median prices of all classes of landed property increased. For detached houses, the increase was the largest at 14.7%. The price growth in semi-detached houses and terrace houses were more muted at 9.1% and 6.2% respectively. ERA Perspective 2015 Private Residential (Landed) Market Review & Outlook 1

2 PERSPECTIVE 2015 Figure 2: Median prices of landed properties Transactions up slightly Transaction volume in the landed residential market has historically been dominated by the secondary market. This is especially so in recent quarters, where new sales have been dismal thus far. saw the number of new sales increase to 40, up from 12 in, a 233% jump. This was primarily due to 13 units being sold at Palms@Sixth Avenue. Resale transactions increased as well, from 214 in to 254 in, a QoQ growth of 15.7%. Accordingly, transactions in increased by 30.1% QoQ to 294 units. However, compared to the same period one year ago, there was still a slight dip of 2.3%. Among the different property types, it can be observed that interest in semi-detached and detached houses are picking up, as transaction levels for these two classes of properties have hit their highest in 2 years. In addition, heightened interest has been observed in the luxury segment. There were 18 transactions which totalled more than $10 million in 2015, which accounted for 6.1% of the total transaction volume. Among these, 4 were Good Class Bungalows (GCBs) in the Tanglin and Bukit Timah areas. Notable transactions include the sale of 35 Ridout Road at $91.7 million, the highest absolute quantum recorded for a GCB transaction, and 2P Bishopsgate at $2,190 per square foot, the highest unit price recorded. ERA Perspective 2015 Private Residential (Landed) Market Review & Outlook 2

PERSPECTIVE 2015 Figure 3: Number of sale transactions by type of sale 1200 1000 800 600 400 200 0 2011 2011 2011 2015 2015 New Sale Resale Figure 4: Number of sale transactions by property type

licences, only 442 units out of 1,571 have been sold. This translates to a mere 28.1%. In addition, out of the total number of 1,571 units, 763 of them have yet to be launched.

3 PERSPECTIVE 2015 Figure 3: Number of sale transactions by type of sale New Sale Resale Figure 4: Number of sale transactions by property type Supply overhang expected In the near future, there may be much more landed properties appearing on the primary market for sale, as data from URA shows that out of the projects with sale licences, only 442 units out of 1,571 have been sold. This translates to a mere 28.1%. In addition, out of the total number of 1,571 units, 763 of them have yet to be launched. Looking at the transaction volumes in the primary market in recent quarters, it would probably be a few years before all the supply is absorbed. ERA Perspective 2015 Private Residential (Landed) Market Review & Outlook 3

4 PERSPECTIVE 2015 Figure 5: Supply in the pipeline >2019 Total Sold Unsold ,129 Transaction volume picked up in. However, with supply looming, most of which are still unsold, prices are expected to have limited upside. Nonetheless, with record prices being set in, the market looks to be on its way to recovery. Declining rentals Similar to the situation in the sales market, the fall in rental levels carried on in QoQ, the rental index for rental properties fell by 1.0%, while YoY, it dropped by 3.8%. Figure 6: Rental index of landed properties Median rentals of landed properties exhibited the same trend across all three property segments. Median rentals of detached houses fell the least at 1.3%, followed by rents of semi-detached houses at 3.6%, while those of terrace houses declined the most at 3.9%. It is expected that rents will continue going on a downward trend in the near future, barring any policy or economic changes. ERA Perspective 2015 Private Residential (Landed) Market Review & Outlook 4

5 PERSPECTIVE 2015 Figure 7: Median rentals of landed properties Rental transactions keeping pace with previous periods A significant portion of rental transactions come from the terrace submarket. In 2015, rental transactions crept up by 5.9% QoQ while dipping by a marginal 0.1% YoY. This was chiefly due to heightened activity in the terrace and semi-detached markets, which increased 8.2% and 17.9% QoQ respectively, a sign that underlying demand for rental landed properties is still strong. Figure 8: Number of rental transactions ERA Perspective 2015 Private Residential (Landed) Market Review & Outlook 5

PERSPECTIVE 2015 Stable vacancy Available stock grew at a rate of 0.1% in 2015, not deviating much from previous quarters. Despite this, vacancy rate dropped to 3.2%.

6 PERSPECTIVE 2015 Stable vacancy Available stock grew at a rate of 0.1% in 2015, not deviating much from previous quarters. Despite this, vacancy rate dropped to 3.2%. This translates into 2,274 empty houses, a significant 7.1% decrease from the previous quarter. With 373 houses slated for completion in the second half of this year, out of which only 221 are unsold, the vacancy rate is expected to remain stable for the rest of the year, probably below 3.5%. Figure 9: Stock and vacancy Rental transactions to be robust Looking forward, developers could face difficulties offloading their landed stock, due to the low take up of new launches. Hence, developers could choose to lease their landed houses on hand for short terms instead of leaving them vacant while looking for buyers in the meantime. This would lead to a more active rental market. Despite this, rents are still projected to fall, on the back of stiffer competition, while transactions are expected to continue being robust. ERA Perspective 2015 Private Residential (Landed) Market Review & Outlook 6

7 The LARGEST * International Real Estate Agency In Singapore * ERA Realty Network is a Singapore registered company that multiplied its sales force from 3 persons in 1982 to its current strength of more than 6,000. The growth is not by merger & acquisition. ERA Realty Network Pte Ltd Estate Agent Licence No. L K MBSQ 229 Mountbatten Road #03-01 Mountbatten Square Singapore ZSP 18 Ah Hood Road Level 8 Zhongshan Park Singapore SLF 510 Thomson Road #14-01 SLF Building Singapore HDB Hub 490 Lorong 6 Toa Payoh #03-17 HDB Hub Singapore TPY 600 Toa Payoh Lorong 4 #02-03A Singapore Tel Fax fb.com/erasg Information contained in this report has been acquired from sources considered to be reliable. While we have made every effort to ensure the accuracy of the report, it is not guaranteed. Readers should seek professional advice before acting on the information presented in this report. This report is exclusively for circulation to ERA s Salespersons, their Clients and Business Partners. Commercial copying, hiring, lending are strictly prohibited.

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