THE SINGAPORE PROPERTY sector has not been spared from the current global economic recession. Housing prices declined 13.8 percent in the first semester of 2009. Urban Redevelopment Authority (URA) said that the price fall was two times the previous quarter’s 6.1 percent. The price fall over the past three quarters was the deepest since the second quarter of 1975.
URA data shows that real-estate transactions in January were the lowest since June 2007. Meanwhile, residential prices are also predicted to fall further in the coming months with new supplies entering the market that is already slow. Revenues from property leases are also predicted to continue falling in 2009 due to the deteriorating economic condition. “The trend is clearly downward,” said Colin Tan, head of research and consultancy at Chesterton Suntec, a real-estate consulting firm. He also said that, while prices have dropped sharply, they are predicted to decline even further.
A report issued by CB Richard Ellis (CBRE), a company involved in global real-estate services, said that the decline in investors’ activities in the fourth quarter of 2008 were influenced by the uncertainty of the economic situation and rising credit interests.
The report said that total transactions in 2008 were only US$17.84 billion, much lower than the US$54.02 billion in 2007. Data from CBRE also disclosed that the prices of non-landed private homes in central areas of the world’s major cities declined 15.2 percent in the first quarter. Meanwhile, housing prices in all large cities around the world fell 17.2 percent.
In other big cities, they declined only 7.5 percent. Mohamed Ismail, chief executive of property agent PropNex, predicted that housing prices in the world’s major cities around the world will drop 7-10 percent. Meanwhile, in large cities, prices will also experience a decline, albeit by 3-5 percent only. Meanwhile, resale prices of apartments built by the Singapore government (HDB), which are more than 80 percent occupied by the Singapore people, also declined 0.6 percent in the fourth quarter of 2008, from the previous quarter.
Recovering from the global economic recession will take quite a long time, said CBRE. Property investments and transactions in Singapore will continue to fall during 2009. Property assets changing hands will continue to increase. Analysts said that property assets changing ownerships rose 18 percent in the fourth semester of 2008 and are predicted to continue rising significantly in 2009 and 2010. The deteriorating economic situation and the high rates of economic collapse will seriously affect the Singapore property market in quite a long time.
According to Colliers International, at the moment many property assets have been surrendered to auction houses. The number of property assets auctioned through banks or other financial institutions rose 18 percent in the fourth quarter of 2008. Colliers warned that the auctioned assets were only an initial figure. Within the next two years, property assets that will change hands are estimated to increase sharply. “We can expect to see a more significant number for repossessed properties in the later part of the year or in 2010.
This is due to the general lag time of approximately six months or more when a buyer defaults on his loan repayments and when the bank repossesses the property and puts it up for auction sale,” said Grace Ng, deputy managing director and auctioneer of Colliers International. The residential sector accounts for 77 percent of the total property assets that will be auctioned. More than half of them are apartment and condominium units.
The majority of the assets that will be auctioned are from the low-class market. Analysts said this is a positive sign that can jack the market up. “It is a positive sign that we are only seeing a small number of residential properties in the prime districts being put up for mortgage sale. This could mean that the highest echelon of the society has yet to succumb to the badly-embattled financial market,” Ng added. Colliers International estimates that the number of property assets changing hands through banks will continue to rise in 2009, and instead it will make the market more attractive to buyers.
There are quite many negative stories about the Singapore property market, but still there is also good news. The Singapore property market is predicted to remain quite strong and be able to survive in the long term. The Urban and Land Institute and PricewaterhouseCoopers (PwC) even place the island state in the second position among the five most favored cities in the Asia Pacific region, in the lists of most developed locations in the real estate market. The lists were made to analyze 20 large cities in Asia-Pacific, based on the observation and views of real-estate experts. (JR)