Singapore Property Prices Coming Down?

According to this article "Private home prices fall in all districts" (Straits Times 26 April 2014), prices have come down 1.3% in 2014 Q1.  Private home prices fell across the island, the first time in nearly 5 years, with the biggest drop in the city fringe (areas like Bishan & Queenstown).

Glut of Unsold Units
Out of total supply of 80,261 private homes under construction at the end of March, slightly more than 1/3 or 29,482, were still unsold.   This 80,261 number excludes the Executive Condos. After adding the supply of 13,691 EC units in the pipeline, the total number is 93,952 units in the pipeline.  Further, another 11,042 units would soon be added to the pipeline.  This brings the total to 105,000 EC plus private units in the pipeline.  All these exclude HDB.

Also note that Minister Khaw Boon Wan has blogged about ECs.  He said that the take-up rate for ECs has been high and supply has been ramped up to meet demand.  He will continue to ensure that EC scheme stay on track.

The above statistics are from the URA Release of 1st Quarter 2014 real estate statistics - the press release can be found here. (dated 25 April 2014, worth a read)

City fringe was hard hit because developers were offering sweeteners and discounts to move units.

A closer look at the chart - which way is it headed?

Some More Charts from URA Press Release

Residential Price Index by Type - since 1997 Q1 (4Q 98 = 100)

Property Price Index by Type of Property since 1997 Q1 - (4Q 98 = 100)

House Hunting
As shared in my About Us page, we currently live in HDB and we do not own any other property in Singapore.  Looking at our investment portfolio, we are aware that we are under-invested in Singapore. But, is this the correct time to buy?

We have visited a couple of units in recent weeks.  Just today, we visited a few condominiums.

For instance, we saw a couple of units at Southhaven II, a freehold condo, at Hindehe Walk, very near Bukit Timah hill.   The place was pleasant and well kept, however, asking prices were $1.7Mil for a 1,800 sq feet unit unit and $1.6Mil for a 1,600 unit.

Well, we are not prepared to pay these prices.  Maintenance charges were $360/month and we were told that those units could rent out for about $4,000.  The estate agent told us that 40% to 50% of the units were rented out.

Well, we don't feel very inspired to move after viewing the units at these prices.  Oh well, that's just us.

Fundamental Demand and Supply Issues 
We see new units sprouting up everywhere.  Government has greatly stepped up HDB supply.  Just within a 500M radius of our HDB flat alone, we have at least 5 X 35-40 storey blocks being built at a breakneck speed, plus another 4 X 35 storey 99-year leasehold development being built.

Tall HDB Towers

Should You Sell Now? 
In my next blog post, I discuss this issue.  So many homes coming up!

There has also been a sharp drop in new home loans.  Check out this recent blog post. 

I found an article by CNBC from Sep 2013 where the analyst (Barclays Bank) predicted that Singapore home prices could be headed for a 20% correction by 2015.  Time will tell.

Channelnewsasia article (27 Apr) on property developers pulling out stops to boost sales.

Research Report by Property Firm HSR - 50 Projects with less than 50% sold.

Happy Investing!!

Important Disclaimer - . The views contained in this blog and blog post are entirely mine. We cannot be made responsible for any investment decisions you may, or may not, take. Nothing in this blog can be construed as professional investment advice, as we are NOT professional investors and we are ill qualified to give you any advice.  Read the blog at YOUR own risk