Suburban Homes the most resilient.
Pending final real estate statistics by the Urban Redevelopment Authority (URA) for 2016 due later this month, developers here sold 5,656 private homes between January and September, while the resale market saw 6,337 units change hands. These are higher than the 5,837 and 5,081 transactions recorded in the same period in 2015.
The Outside Central Region (OCR), or suburbs, looks set to dominate sales given the larger available supply and more affordable prices. Several developments that are expected to be launched for sale this year are situated in this area, including The Clement Canopy at Clementi Avenue 1, as well as projects on Siglap Road and New Upper Changi Road.
The Rest of Central Region (RCR) and Core Central Region (CCR), or city fringes and city centre, are likely to see a slower pick-up as these segments are more affected by the cooling measures given their high price quantum. Nevertheless, there are several launches worth watching here, such as the one to be built in Martin Place in River Valley and Park Place Residences at Paya Lebar Quarter (PLQ).
Mr Richard Paine, managing director of PLQ by Lendlease, said: â€œWith the property cooling measures likely to remain, and a slowing economy anticipated for 2017, we can expect a relatively soft property market. However, residential sentiments are slowly improving â€¦ We are optimistic that buyer interest will continue to improve â€¦ as price expectations between buyers and sellers stabilise.â€
Analysts agreed that projects that are well-located and priced attractively will continue to draw buyers. This could help to lower unsold inventories, which has fallen to 22,500 as of the third quarter of last year, from 32,200 units three years ago.
However, there could be an increase in launched projects as developers trigger more sites on the Government Land Salesâ€™ Reserve List. Additionally, there is great interest in en bloc sites. Hence, the increase in launched projects might offset the decline in unsold units in the inventory.
With a high amount of supply coming into the market, vacancy rates of private homes here look set to climb further. Vacancy rates for non-landed private homes may hit 11 to 13 per cent in 2017 from the 10 per cent at the end of 2016â€™s third quarter.
Adding to the woes of rising vacancy rates is a subdued rental market, with supply likely to continue to outweigh demand in the coming year. URA statistics showed that overall rents have fallen by 10.7 per cent in the third quarter of last year from the peak in the third quarter of 2013.
Though the number of incoming completions would have peaked in 2016, the number of expected completions is still above the 10-year average annual completions, from 2006 to 2015, of 11,890 units for landed and non-landed.
The effects of the high number of completions in recent years are expected to persist. Demand remains capped as the economic outlook remains weak and foreign labour continues to be restrained.
Adapted from: TODAY, 5 January 2017