Singapore Residential Sales Slide 14 Percent from Coronavirus in Q1

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Both the Non-Landed Property Price Index (PPI) and the Landed Property Price Index also registered q-o-q declines of 1.0 and 0.9 per cent in Q1 2020 respectively. While this was the second consecutive quarter of decrease for the Non-Landed PPI, this was the first quarter of decline for the Landed PPI after two consecutive quarters of increase. However, on a year-on-year (y-o-y) basis, both PPIs still posted growth with 2.0 percent change for Non-Landed PPI and 3.6 per cent y-o-y increase for Landed PPI for the first quarter this year.

The decline in prices came amid the COVID-19 pandemic and economic slowdown, dampening market sentiments and muted demand for homes as local homebuyers held back their purchase plans to assess their financial positions. Additionally, the COVID-19 pandemic led to lockdowns in many countries, restricting short-term visitors and potential foreign homebuyers entering Singapore. As the number of new cases of COVID-19 heightened since March 2020, stepped up restrictions on people mobility in Singapore such as social distancing and caps on the number of visitors to residential show flats have reduced purchasing and leasing activities, impacting the private home transactions and prices.

Against the backdrop of slowdown in housing demand amid weakened sentiments, total transaction volume of private homes declined for the second consecutive quarter by 14.4 percent q-o-q to 4,174 homes in Q1 2020, the lowest since Q1 2019, when total sales amounted to 3,743 units. As there were fewer launches in Q1 2020 (10 projects compared to 12 in Q4 2019) and homebuyers turned more cautious amid economic uncertainties and the COVID-19 pandemic, new sales decreased by 12.0 per cent q-o-q to 2,149 units in Q1 2020, constituting 51.5 per cent of total private home sales. Transaction volume in the resale market fell by a larger 16.8 percent q-o-q to 2,025 units.

In the Core Central Region (CCR), 859 units were launched in Q1 2020, a 63.6 percent increase from the 525 units in Q4 2019. The hike in launched units brought about more transacted units, with 546 units sold in the CCR new sales market, despite muted residential demand. This was mainly led by the high take-up rate for The M, with more than 70.0 per cent (375 units sold, median price at $2,439 per sq. ft). Apart from The M, there were six other new launches in the CCR in Q1 2020.

In the Rest of Central Region (RCR), there was an increase in the number of launched units from 493 in Q4 2019 to 623 units in Q1 2020. However, there was a 14.7 percent q-o-q decline in transaction volume to 765 units in the same quarter.

In the Outside Central Region (OCR), the number of launched units almost halved from 1,208 units in Q4 2019 to 611 units in Q1 2020.

Correspondingly, new sales in the OCR fell by 30.7 per cent q-o-q to 778 units (Figure 6), falling below 1,000 units for the first quarter since Q4 2018, when 713 units were sold in the new sales market. This can also be attributed to the lack of large-scale launches in Q1 2020, with only two new projects of less than 50 units each being launched. In contrast, out of the five new launches in the OCR in Q4 2019, three launched more than 100 units each.

Following the slower sales in Q1 2019, new sales plummeted in April 2020, due to closures of condominium show flats from 7 April 2020 as part of the Government's circuit breaker initiative. In April 2020, new sale units sold by developers totaled 277 units, a steep decline of 62.4 percent y-o-y and 58.0 per cent month-on-month (m-o-m).

Projects that were in the top five rankings in terms of units sold in month of April 2020 included Kopar at Newton (83 units sold, median price at $2,241 per sq. ft), Treasure at Tampines (28 units sold, $1,372 per sq. ft), Riverfront Residences (17 units sold, $1,208 per sq. ft), Jadescape (12 units sold, $1,735 per sq. ft), and The Florence Residences (11 units sold, $1,489 per sq. ft).

Top six selling projects in the CCR in the months of April and May 2020 were Kopar at Newton (94 units sold, median price at $2,252 per sq. ft), Fourth Avenue Residences (8 units sold, median price at $2,112 psf), in The M (7 units sold, median price at $2,477 psf), Van Holland (3 units sold, median price at $2,981 psf), Boulevard 88 (2 units sold, median price at $3,713 psf) and Midtown Bay (2 units sold, median price at $2,860 psf).

In the primary market, the highest proportion of transactions in Q1 2020 (by strata floor area) of 33 per cent constituted units between 500 and 700 sq. ft, a marginal uptick compared to 32 per cent in Q4 2019 (Figure 8). This unit size range mainly consists of 1- and 2-bedroom units. This was followed by units within the 700 sq. ft to 1,000 sq. ft size range, which comprised 31 per cent of the transactions in Q1 2020. For this size range, bedroom configurations largely ranged from 1+study bedroom type in prime districts and 2- to 3-bedroom types in other districts.

In terms of price range, the bulk or 46 per cent of the transactions were in the $1m to $1.5m price band in Q1 2020, a 5 percentage point increase from Q4 2019. Majority of transactions in this price band are new sale units in districts 5, 7, 14 and 19. Correspondingly, there were reductions in proportions of transactions in the price bands of less than $1m, $1.5m to $2m and $2.5m to $3m - out of which, the largest drop in proportion was transactions less than $1m, declining for the second consecutive quarter from 23 per cent in Q4 2019 to 20 per cent in Q1 2020.

In April and May 2020 during the circuit breaker period, about 45 per cent of new sale transactions were in the $1m to $1.5m price band, 21 per cent in $1.5m to $2m price band and 6 per cent in $2m and $2.5m price band. There was a 6 percentage point increase in transactions with less than $1m price band compared to Q1 2020.

Across the market segments, it was observed that buyers in the CCR were more cost conscious in Q1 2020 compared to Q4 2019. In Q1 2020, more than half, or 57 per cent of the new sales in the CCR were less than $1.5m, with most of the transactions in the $1m to $1.5m price bracket (Figure 10). In contrast, there were only 25 percent of such transactions in Q4 2019. This mainly came from smaller bedroom configurations of less than 500 sq. ft and between 500 sq. ft to 700 sq. ft at the newly launched The M (District 7).

Correspondingly, the proportion of transactions in the other price bands declined on a q-o-q basis, with new sales in the $2m to $3m price bracket decreasing the most from 37 per cent in Q4 2019 to 12 per cent in Q1 2020. For new sales in the $1.5m to $2m price band, despite a decline in proportion from 25 per cent in Q4 2019 to 23 per cent in Q1 2020, there was an increase in actual transaction volume from 95 units in Q4 2019 to 126 units in Q1 2020. Apart from The M, another key contributor to the growth in sales volume in the $1.5m to $2m price bracket in Q1 2020 was Leedon Green (District 10).

For new sales in the RCR, there was an increase in proportion of transactions in the price ranges of $2m to $3m (10 per cent in Q4 2019 to 15 per cent in Q1 2020) and greater than $3m (2 per cent in Q4 2019 to 3 per cent in Q1 2020). These transactions were mainly of sizes ranging from 1,000 to 1,500 sq. ft contributed from units sold at Jadescape (District 20), which was launched in September 2018 and Margaret Ville (District 3), which was launched in June 2018.

Bulk of purchasers, or 78 per cent of the private homebuyers in Q1 2020 with known residential status are Singaporeans, while there was a slight decline of 1 percentage point in foreign purchasers from 7 per cent in Q4 2019 to 6 per cent in Q1 2020. Permanent residents contributed 16 percent of overall proportion of non-landed transactions for the same quarter.

In terms of absolute transaction volume, purchasers of all residential status declined, with the largest q-o-q fall of 26.1 percent from foreign purchasers (non-Permanent Residents) to 215 units in Q1 2020, which was the lowest since Q1 2019 when foreigners purchased 165 units. Transaction volume by Singaporeans and Singapore Permanent Residents (PR) decreased by 12.5 per cent and 10.5 percent q-o-q to 2,923 and 610 units respectively in Q1 2020. A total of 2,089 non-landed sales was clocked in the same quarter.

Out of the non-landed transactions by foreign homebuyers (by nationalities, PRs and non-PRs), foreign (unspecified) buyers comprised the largest proportion with 27.0 per cent in Q1 2020, followed by mainland Chinese buyers, comprising 23.7 per cent. For the mainland Chinese buyers, this proportion in Q1 2020 was lower than the 27.9 per cent in Q4 2019.

In traditional prime districts (i.e. Districts 9, 10 and 11), mainland Chinese remained as the top foreign homebuyer group in Q1 2020, with a slight increase in proportion from 25.3 percent in Q4 2019 to 25.6 per cent (Figure 14). Other top nationalities in Q1 2020 included Indonesians (14.1 per cent), Malaysians (8.3 percent) and Americans (8.3 percent).

In the city and emerging districts (i.e. districts 1, 2, 4, 7 and 15), mainland Chinese also remained as the top foreign homebuyer group in Q1 2020, constituting 26.3 per cent of the foreign purchases. However, this proportion had fallen from 33.6 per cent in Q4 2019. Other top nationalities included Malaysians, Indians and Indonesians.

For the other districts (mainly city fringe and suburban districts), mainland Chinese and Malaysians comprised the top two foreign homebuyer groups in Q1 2020 (after foreign (unspecified) homebuyer group), followed by Indians and Indonesians. Transaction volumes by these groups of buyers declined on a q-o-q basis, except for Indians with purchases remaining at 57 units. Purchases by Malaysians fell the most by 43.9 percent q-o-q to 64 units in Q1 2020.

Based on URA estimates as at Q1 2020, 2,093 private residential units (or 6.3 percent of overall pipeline launches) were launched for sale, while 31,077 units have not been launched for sale. Out of which,

the bulk or 16,220 units have not obtained pre-requisites for sale (48.9 percent) while the remaining 14,857 units (44.8 per cent) are unlaunched units with pre-requisites for sale.

Based on EDMUND TIE Research estimates from land acquisitions since 2018, more than 9,000 new sale units of pipeline launch supply is envisaged for 2020, barring any unforeseen circumstances for each project on approval process before launch. Out of this pipeline launches, more than 5,000 units are of 99-year leasehold tenure. The RCR at the city fringe has the least pipeline launch supply this year, with an estimated total of 1,814 units. However, there may be a slowdown in new launches as developers may delay the project launches for H1 2020 amid ongoing uncertainties stemming from the COVID-19 pandemic.