Singapore Home Prices Post First Drop in Six Quarters

(Bloomberg) -- Singapore home prices posted their first decline in six quarters as the government’s cooling measures imposed in July started to bite.

Private residential prices slid 0.1 percent in the last three months of the year, according to preliminary data from the Urban Redevelopment Authority released Wednesday. Luxury was the segment hit the hardest, with prices in prime areas dropping 1.5 percent after climbing 1.3 percent in the previous quarter. Still, the index posted a 7.9 percent gain for 2018 as a whole, the best annual increase in eight years.

“The cooling measures coupled with the U.S.-China trade war and volatility in stock markets have hit the high-end homes segment,” said Christine Li, head of research for Singapore at Cushman & Wakefield Inc. “Also a dearth of new launches in the prime areas could have resulted in weaker prices.”

Authorities in Singapore have kept the property market on a tight leash since the early 2010s in an attempt to avoid runaway prices like those seen in Hong Kong. In July, the government imposed higher stamp duties and tougher loan-to-value rules to choke off a sudden bout of exuberance. The earlier resurgence had been marked by aggressive land bids from developers and an explosion in en-bloc sales, where apartment owners band together to sell entire buildings.

This year, prices will rise a maximum of 3 percent -- or even stay flat or decline -- according to estimates from four real estate firms, after last year’s resurgence prompted a renewed clampdown. Home sales are forecast to once again lag behind 2017 levels.

Singapore Home Prices Post First Drop in Six Quarters

Extra constraints since July have included curbs on the number of “shoe-box” apartments, limiting transactions at the cheaper end of the market, and anti-money laundering rules that imposed an additional administrative burden on developers. The government is slowing the release of land for residential use in the first half of 2019, citing a spike in supply and cooling demand.

Prices of prime-area apartments rose 6.2 percent in 2018, while those in suburban areas gained 9.5 percent, the latest data show. The following table gives a breakdown of price moves in the most recent quarter.

Apartment PricesFourth quarterPrevious quarter
Prime districts-1.5%+1.3%
Suburban areas0.8%-0.1%
Areas near prime districts1.8%-1.3%

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