Singapore home prices fall further, but still to hit bottom as the city state grapples with an unprecedented recession

The coronavirus pandemic hit Singapore property sales in the second quarter.
PHOTO: Reuters

Singapore home prices fell by the most in 15 quarters in the three months to June, with analysts warning that the worst is yet to come as the coronavirus pandemic batters the Southeast Asian nation’s economy.

Prices of private homes dropped 1.1 per cent in the second quarter, widening from the 1 per cent drop seen from January to March, according to data released by Singapore’s Urban Redevelopment Authority (URA) on Wednesday.

It fell short of the 1.5 per cent decline in the third quarter of 2016. Singapore's home price had jumped 11.3 per cent between 2017 and 2019 after posting a 3.1 per cent drop in 2016.

“Developers have been pricing units sensitively, while in the resale market sellers are more realistic with their asking prices,” said Ismail Gafoor, chief executive of PropNex, a major property brokerage agency in Singapore.

The nearly two-month long lockdown imposed in Singapore since April 7, when the city state was dealing with a resurgence of the Covid-19 disease, forced developers to close show flats and put a stop to home viewings, which took a toll on sales.

Developers sold 1,343 new homes in the second quarter, a decline of nearly 38 per cent from the previous quarter, while only 725 units changed hands in the secondary private home market, some 65 per cent lower than the first quarter, according to the URA.

PropNex’s Gafoor said that he expects private home prices to drop up to 3 per cent this year, ending three straight years of increases in Singapore’s buoyant housing market.

Colliers International, however, is much more pessimistic. The property consultancy expects private residential prices to decline by up to 5 per cent this year as “home prices are highly correlated to household income and job security”.

The pandemic has exacerbated the slowdown in the trade-dependent nation, which was already hurting from the impact of the US-China trade war.

Singapore, already in the midst of its worst recession ever, could see its economy contract by 5.8 per cent this year, according to a survey of economists and analysts polled by the Monetary Authority of Singapore last month.

It is a sharp reversal from the 0.6 per cent growth forecast in an earlier survey.

The unemployment rate in Southeast Asian nation climbed to its highest level in a decade at 2.4 per cent in the second quarter due to the pandemic.

Singapore is the second worst affected country in Southeast Asia after Indonesia, with nearly 44,000 coronavirus cases and 26 deaths as of Wednesday.

The country has been opening gradually in phases since June 19 after keeping most of its population in lockdown.

Schools, shopping malls and most workplaces were closed for two months to bring the outbreak under control.

This article was first published in South China Morning Post.