The Singapore property market has been through seven rounds of cooling measures since early 2009. Prices and volume have become more volatile, with every round of cooling measures met with immediate depressed demand, which recovers shortly after. More recently, following the seventh round of cooling measures, prices and volume seem to be tapering off, with figures for new homes sold in May 2013 showing only a very slight uptick in prices and volume. In May, 1,455 units (excluding executive condominiums) were sold, versus 1,380 units in April 2013, a rise of 5% m-o-m.

During the month, 12 new projects were launched, with demand strongest for projects located on the fringes of the city, i.e. Rest of Central Region (RCR), where the price premium over mass-market private homes has shrunk to a historical low of 41%. Nonetheless, well-priced mass-market homes located in the Outside Central Region (OCR) that cater to upgraders from the public to private housing markets such as Stratum at Pasir Ris continue to enjoy strong support from buyers.

Among the new launches in May, projects situated within the RCR, such as KAP and Corals at Keppel Bay, had remarkable take-up rates of above 80%. The strong sales at Corals at Keppel Bay could be motivated by the vision of planners to transform the Southern Belt of Singapore into another live-work-play sub-market when the lease for the port at Tanjong Pagar expires in 2027. This large tract of prime waterfront land, including a portion near HarbourFront where Corals at Keppel Bay is located, is likely to catalyse the further development of Singapore’s waterfront living, which the market has liked in recent years.

Overall sales in the OCR are holding up well, as evidenced by a take-up rate of above 100%, i.e. the number of units sold (728) exceeded the number of units launched (702) in the month. Sales at Stratum at Pasir Ris have been strong, given the comparatively cheap prices of under SGD 1,000 per sq ft, which is becoming rare in the OCR.

Value hunting seems to be driving demand in the RCR, given the closing gap with prices in the OCR. Buyers are homing in on the possible arbitrage opportunities presented between these two regions, although prices in the RCR on an absolute basis may be higher than similar-sized projects in the OCR. The potential capital appreciation over the longer term coupled with a readily available pool of tenants who want to be closer to the city, makes projects located in the RCR highly attractive.

The latest cooling measures were announced five months ago, and May 2013 data shows the market normalising and returning to a stable level. Barring external shocks, our full-year forecast for developer sales is between 17,000 and 18,000 units, with 9,000 to 10,000 units over the next seven months added to the 8,000 units sold over the first five months. In my opinion, the risk of further government intervention is rather low.

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