At MortgageWise.sg, we try to provide our property investor clients with a snapshot of the performance of Singapore residential property market regularly through our own basket of condos which will provide supplementary insights in a more meaningful and personal way than a mere broad-based index from URA. Properties are not created equal and some will rise or fall more than the rest.

URA latest statistics for 2018 Q4 was released at end of January just before CNY and most may not have time to pore over the details.  As usual, we will only give an overview in terms of the movements of PPI (property price index) for non-landed as a whole (islandwide) and the breakdowns by URA’s zoning ie. CCR (core central region), RCR (rest of central region) and OCR (outside central region).  Full details can be found on URA website (source of illustrations below).

Note that the base year for residential PPI is at last financial crisis low of Q1 2009 (where PPI = 100).

Overall, PPI for non-landed increase by 8.3% in 2018 with much of the growth coming in the 1H, a result of property cooling measures implemented on 6 July 2018 that saw ABSD went up by 5% and loan quantum reduced by 5% in an effort to dampen buying interest and enbloc fervour.

MORTGAGEWISE’S BASKET OF CONDOS

Now we will take a look at the performance of condos in our own basket of study.  Note our comparison is based on on 6-month period which differs from URA’s quarterly measure.

The condos selected in our basket are deemed iconic enough to be representative of prices in a particular precinct that is smaller than a whole central region or outside central region as defined by URA.  For areas outside central region we also tend to pick condos either right at or nearest MRT stations as these tend to be well sought after by investors.  Our basket would allow property investors to see the actual variation in prices over time for a particular group of condos that are fairly well-known in Singapore.  However our illustration is nothing more than simple averages of all transactions done over 6-month periods and in cases where there are less than 5 transactions (marked with an asterisk) do take the reading with a pinch of salt.  We also highlight the highest psf achieved in the period.

We will look at the performance of the basket of condos in the most recent 6-month period, and contrast that with the preceding 6-month.  Percentage variation of more than 5% will deemed significant enough to be highlighted (in blue for increase and in red for decline).

We will ignore double-digit decline registered by Orchard Residence as there is only 1 transaction in 2H 2018.  In fact, there is a significant drop in volume following after the cooling measures in July as we see a lot of asterisks in our basket (condos with less than 5 transactions).  Notwithstanding 2H is where the impact of cooling measures is felt at full-force, our basket performed relatively well with almost half of them still registering above 5% growth (in blue) in ave psf prices.  This is testament of their popularity as investment-grade condos in Singapore. One worthy of mention is The Cosmopolitan in district 9 that has done exceptionally well with avergage transaction prices at all-time high of $2,401! (highest done at $2550)

In the outskirts, properties at MRT locations continue to do well with credible increases in spite of dampened sentiments in 2H, with only one exception of Compass Heights (prices holding).  This is in keeping with URA’s index showing properties in mass market (OCR) registering the highest growth of 9.4% in 2018.

The resilience of the property market in Singapore, despite draconian measures at times, continues to form a solid basis for why it is a good asset class for wealth preservation and effective hedge against inflation.  Still, investors should thread cautiously as the next global recession is a surefire reason for PPI to reverse the uptrend and no one knows when will we approach this end-cycle.

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest trends in the industry, providing useful mortgage tips, and making sense of rate movements.  We aim to build trust with clients for longer-term partnership and not just do product-pushing for a one-time deals unlike bankers. That’s why we always present “whole-of-market” perspective including packages that banks do not pay us.