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REAL ESTATE DATATREND Private Residential Market Keener Sense of Real Estate Transaction volumes surging as price slide continues CCR prices outperforms market For the whole of 2016, CCR has outperformed her peers, with prices only falling 1.2%. The RCR and OCR saw prices decline by 2.8% and 3.4% respectively. The outperformance of CCR prices can be partially attributed to increasing interest in the high-end market as developers start offering innovative schemes such as Deferred Payment Schemes. RESEARCH & CONSULTANCY John Tay Research Analyst Wong Xian Yang Head E-mail: [email protected] Website: www.orangetee.com Follow us on Resale volumes gain strength as prices fall For 2016, a total of 16,378 private residential units were sold, representing an increase of 16% over 2015’s tally of 14,117 units. A large part of the increase was driven by the secondary market (resale & subsale), with volumes (8,406 units) rising 25.9% y-o-y from 2015. The jump in secondary volumes can be attributed to better matching of buyer seller expectations amidst falling prices and rents. Unsold inventories at their historical lows Developers sold 7,972 homes in 2016, which is a y-o-y increase of 7.2%. The rise in demand for new homes coupled with the tapering of the Government Land Sales programme in recent years has led to unsold inventories reaching their historical lows since available data from 3Q06. Demand in the primary market is expected to persist, barring a sharp rise in interest rates and unforeseen deterioration in the economy. Tenant’s market expected to prevail in 2017 For 2016, overall non-landed rents fell 3.6%. OCR rents fell the most, falling 6.7% as compared to CCR and RCR rents which fell 3.3% and 1.9% respectively. Exhibit 1: Key indicators Current vacancy rates in the CCR and RCR are both at 9.6%, while OCR vacancy rates are at 7.1%. We expect OCR vacancy rates to rise given that 55% of incoming completions in 2017 will be in the OCR. Rents are expected to trend lower in 2017 as supply continues to overwhelm demand due to anaemic economic growth and restrained inflow of foreigners. Note: 4Q16 GDP figures are advance estimates. Source: URA, MTI, OrangeTee Research See terms of use on last page. Page 1 | 5 | Singapore | Residential | Market to stabilise in 2018 A 0.4% q-o-q price drop in 4Q16 extends the longest period of falling private residential prices to 13 consecutive quarters. Though prices remain on a down trend, the rate of decline is flattening, on the back of rising volumes. For the whole of 2016, overall prices fell 3.1%, improving from declines in 2015 and 2014 of 3.7% and 4.0% respectively. At this pace, we could see prices stabilise by 2018. 26 January 2017 | Singapore | Residential | Exhibit 2: Private Residential Property Price Index (RPPI) Source: URA, OrangeTee Research Exhibit 3: Non-landed RPPI, breakdown by region Source: URA, OrangeTee Research Exhibit 4: Private residential units sold in primary and secondary market Source: URA, OrangeTee Research See terms of use on last page. Page 2 | 5 | Singapore | Residential | Exhibit 5: Private Residential Property Sales(based on caveats), breakdown by residential status Source: URA, OrangeTee Research Exhibit 6: Private Residential Property Rental Index, breakdown by region Source: URA, OrangeTee Research Exhibit 7: Occupancy rate, island wide (%) Source: URA, OrangeTee Research See terms of use on last page. Page 3 | 5 | Singapore | Residential | Exhibit 8: Expected completions Source: URA, OrangeTee Research Exhibit 9: Expected completions, by market segments Source: URA, OrangeTee Research Exhibit 10: Private residential unsold inventory Source: URA, OrangeTee Research See terms of use on last page. Page 4 | 5 | Singapore | Residential | Exhibit 11: Private non-landed residential supply in the pipeline breakdown by planning areas as at 4Q16 Source: URA, OrangeTee Research Exhibit 12: Occupancy rates, breakdown by region (%) Source: URA, OrangeTee Research Page 5 | 5 Terms of Use: The reproduction or distribution of this publication without the express consent of the author is prohibited. This publication is provided for general information only and should not be treated as an invitation or recommendation to buy or sell any specific property or as sales material. Users of this report should consider this publication as one of the many factors in making their investment decision and should seek specific investment advice. OrangeTee.com Pte Ltd and the authors of this publication shall not accept and her eby disclaim all responsibilities and liability to all persons and entities for consequences arising out of any use of this publication.