Bloomberg has recently published an article about signs of Singapore’s property market recovering. The most important part of the article is as follows:
“We expect to see more collective sales this year as developers move quickly to replenish their land banks, which for many now lie at multi-year lows,” Eli Lee, a senior analyst at OCBC Investment Research said in a note to clients. “Buyer sentiment appears to have improved after the latest tweaks to the property curbs in March. We believe these changes are supportive of the physical market.”
En-bloc sales could reach about S$3 billion this year, with about 40 deals in the pipeline, according to Yong Choon Fah, national director of investment sales at realtor JLL Singapore. That would be the busiest year since 2011, the tail end of a five-year housing boom that prompted the government to impose an ever-stricter regime of curbs to cool the property market.
The last boom for redevelopment deals was in 2007 when 126 sales were struck, with a total value of S$12.3 billion, according to Cushman.
Potential en-bloc deals could hit a 5-year all-time high since 2011. Does this send a strong signal that developers are getting much more optimistic about the Singapore property market? Whether it is a strong signal remains to be seen, but it certainly does look like increased confidence that there is profit to be made from current prices.
Data from URA indicates that 1,024 new homes (excluding executive condos) were sold in May 2017, a huge decrease of 34% from the 1,558 units sold in April 2017. However, this should also be put in perspective of the fact that only 339 new units were put on the market in May by developers compared to 1,616 in April.
Based on SRX Property’s flash estimates for May 2017, rental index for non-landed private homes in the Outside Central Region or OCR eased 4.8 per cent year on year. This was followed by a 3.7 per cent decline in the index for the Core Central Region (CCR) and 3.2 per cent drop in the Rest of Central Region (RCR). Demand for apartments are certainly not strong, which is also another health indicator for the property sector.
Thus with the lack luster sales last month and weak rental demand, it is certainly early days if indeed we are looking at a recovery of the Singapore property market.