Monthly Property Market Update for October 2008

The Pandora Box has been opened.

October began with some really bad news for the entire world, and ended with the worst stock market crash in three decades. At the time of writing this report in early November, the stock market is still battling to stay ‘head above water’.

After two consecutive quarters of shrinking growth, Singapore is now officially in a technical recession. As it is, the domestic economy contracted by 0.5% in the third quarter (Q3) of 2008 year-on-year. The last time the island city was in a similar fix was 2002.

The Ministry of Trade and Industry (MTI) has lowered its expectation on full year growth of 2008 to 3% and cautioned that Singapore export might drop drastically, due to the rising unemployment and slumping home prices in the United States.

The Monetary Authority of Singapore (MAS) has eased its monetary policy in early October to combat slowing growth. To boost export, the MAS have shifted Sing dollar to a neutral stance, making it cheaper in relation to other major currencies and thereby making domestic exports competitive. However, the flip side is that import of daily essentials, such as food stuff, will be more expensive, making life tougher for man-in-the-street.

On the real estate front, the private property segment was among the first to show the open-wound sustained from the stock market fall earlier. Prices of private homes fell by 1.8% in Q3 2008 – the first decline in prices in four-and-a-half years, officially ending the property boom that started in 2004. In fact, since Q2 2008, private property prices had been deadlocked within very narrow range, but they finally caved in after the buyers started to play the ‘missing-in-action’ (MIA) game.

All said, it is quite certain that we are in for an economic tailspin.


(A) The big picture of the larger economy


[A.1] Foreclosure crisis in US nowhere near end

Despite the US$700 billion rescue package to prevent banks in the US from going under, there has been no help from the US government to prevent foreclosure of homes. Since July 2008, the rate of foreclosures has been more than 2,700 homes a day.

According to the Mortgage Bankers Association in the US, more than four million homeowners throughout the US with a mortgage are at least one month late in their mortgage repayment. This is more than three times the total number of houses we have in Singapore.

A record 500,000 homes had entered the foreclosure process. For at least a year, no experts have correctly predicted the dire straits that the American homeowners are in today.

[A.2] Falling home prices see no reprieve

The home prices in the US have crashed, to put it mildly. The National Association of Realtors (NAR) said that in September 2008 alone, the median home price in the US dropped a further 9% from a year ago to US$191,600, and is down 17% from the peak in July 2006.

Almost a quarter of the total homeowners in the US with a mortgage are staring at negative equity, and the percentage of homes with negative equity is expected to rise to 28% by the same month next year.

According to research by Freddie Mac, about 36% of mortgage delinquencies were caused by loss of income or unemployment in 2006. But in 2008, that number has risen to 45% as the unemployment rate has ticked up to a five-year high of 6.1 %.

The massive job losses in October 2008 would make the situation worse as more delinquencies might follow suit before Santa comes calling in December.

[A.3] No way to escape hard landing for Singapore

Alluding to the current crisis, an International Monetary Fund (IMF) study pointed out that economic downturns caused by failures of financial institutions such as banks and insurers are often more severe, and tend to last much longer.

Most economists expect the economic downturn in Singapore to drag for at least nine months in 2009 if not longer. Some even predicted that the crisis in the US will last through 2010.

And as far as Singapore is concerned, its trade revenue is about 2.5 times of its GDP; and given its openness (and thus vulnerability) to global economy and its export-orientation, it cannot escape the repercussions of external shock.

Domestically, the danger of contagion has started to show, beginning with the tighter credit and higher costs of borrowing which have started to eat into corporate earnings and curtailed capital spending. Even companies with strong balance sheets are watching their cash flows carefully. Consumer consumption which grew 10.5% last year may come down to a fraction of that figure in the next couple of years.

The consequences will be slower wage growth, lower consumer spending, cautious job market, plunging stock prices, and deflation of asset prices. Especially dangerous is the higher refinancing costs and declining home values which may put home owners at greater risk of negative equity.

[A.4] More companies in Singapore default on payments

Credit rating agency Dun and Bradstreet (Singapore) said more businesses are falling behind in making payments. Apart from construction, more local businesses in other sectors will fall into the high-risk pocket this year and next. The riskiest industry appears to be retail, where more than half of them are expected to fall behind in payments in 2009.

Based on monthly payment data collected from an average of 4,000 to 5,000 firms based here, D&B says 22.2% of them have a high risk of not meeting payments this year, up from 19.77% last year. And with MTI lowering the growth forecasts for this year to about 3%, the proportion of high-risk firms may rise to almost 30%.

With the recent shake-up in the global financial market, the aggressive SME (small and medium enterprises) banking and collateral-free term loans that the banks were dishing out in 2006-2007 period would be a thing of the past.

[A.5] Retail spending in Singapore down for third consecutive month

According to the Retail Sales Index released by the Department of Statistics (DOS) in mid October 2008, retail spending was down 5.8% from July 2008. For the third straight month in August, demand for cars and recreational goods dropped amid the country's first recession since 2002.

Sales declined across the board from their July takings, with falls ranging from 3.6% to 20.4%.

A recent Straits Times survey of 62 tenants in six Orchard Road malls found retail revenues having plunged by as much as 30% from late September to mid October 2008, coinciding with bank failures, stock market routs and increased fears over the global financial turmoil.



[A.6] Even the once-revered REITs are now in trouble

Real estate investment Trusts (Reits), once touted as the safer investment in income-producing properties and a good substitute for direct investment of physical properties are now on shaky ground due to over-gearing in relation to their ‘suddenly depleted’ asset values (resulting from the recent stock market crash). The recent ‘roller coaster ride’ in their share prices had accentuated the risks of Reits.

[6.1] CMT puts works at three malls on hold

Due to high construction costs, Capital mall Trust (CMT) had, at the eleventh hour, pulled the plug on the upgrading plans for some of its properties.

The largest real estate trust in Singapore has reportedly said that it would not sacrifice liquidity for new projects. For now, enhancement programs that have not started at three malls - Funan DigitalLife Mall, Tampines Mall and Jurong Entertainment Centre (JEC) - have been put off.

This may have saved the largest Reit in Singapore $170 million in potential renovation costs. But the consequent loss of rental income from JEC for the following months (all JEC tenants had vacated before CMT decided to put the renovation work on hold) may negate the savings.

CMT said it had secured refinancing for $187.5 million and $80 million of loans due in December 2008 and May 2009 respectively; and is negotiating refinancing for $673.7 million due in August 2009. It is confident that funding would be secured.

[7.2] Worries of downgrading of credit rating

In the meantime, credit rating agencies have turned more pessimistic on two other real estate investment trusts (Reits) in Singapore: Frasers Commercial Trust (FCT) and Macarthur Cook Industrial Reit (MI-Reit).

FCT, which was rated BB, was downgraded by Standard & Poor’s (S&P) Ratings Services from positive to developing, on concerns over the $70 million it owed to the Commonwealth Bank of Australia, which will be due on 22 November 2008. Moreover, there are an additional $400 million and $150 million which would be due in July and December 2009 respectively.

S&P said that FCT had not finalised its refinancing plans to the level of certainty.

Separately, Moody's Investors Service yesterday placed MI-Reit's Baa3 corporate family rating on review for a possible downgrade. The review also recognised refinancing risks facing MI-Reit. Likewise, MI-Reit has $201 million or 91% of its total debt falling due next April, which is not covered by available committed facilities.

This sums up the desperate state many Reits are in right now.


The overall performance of Private Residential Property segment

Q3 officially ushered in the ‘decline phase’ of the property cycle with the overall prices of private homes down by 1.8%. More property consultants are jumping on the bandwagon by saying that prices are going to keep dropping deep into the second half of 2009, in view of the continuing financial turbulence and the global recession, which is still in its infancy. Below shows the performance of the respective geographic areas in Q3:

§ In the Core Central Region (CCR), where the posh Orchard Road, Holland and Bukit Timah districts are located, private home prices fell for the second consecutive quarter, from the 0.1% marginal dip in Q2 2008 to the 2% drop in Q3.

§ In the Rest of Central Region (RCR), from Queenstown, Bishan to Marine Parade and Sentosa, private home prices dropped by 2.1%.

§ Private home prices in Outside Central Region (OCR) held steady and actually rose slightly by 0.1% in Q3 2008, after rising 0.9% in Q2 2008.

[B.1] Developers braving bad time to launch over 2,000 new homes in Q4

A total of 34 residential projects with a total of 2,012 new home units may be launched before year end. The new home units will be located at the following areas:

New home projects to be launched in Q4 2008
Locality

Core Central Region
No. of projects 10 No. of units 1,104

Rest of Central Region
No of projects 13 No of units 718

Outside Central Region
No of projects 11 No of units730
Source of data – Straits Times

Evidently, developers had already slashed prices to try to bring down unsold inventory. In September, Far East Organisation and Wing Tai managed to sell eight units in Floridian after seven months of drought. But the median sale price of $1,443 psf was 16.8% lower than the January median prices of $1,735 psf.

Similarly, some units at Madison Residences along Bukit Timah Road were sold at median prices of $1,801 psf, or 10% lower than the median price a year ago.

Viva in Thomson Road and Park Infinia in Wee Nam Road achieved $1,555 psf and $1,501 psf - about 5% less than comparable projects early this year.

[B.2] Prices dropped amid lower transactions for luxury condo

While most of the luxury condo which were launched in the 2006/07 periods are still being transacted at above their original launched prices, the sub-sale prices have already come off their peak. Let’s look at some examples.

Prices at The Oceanfront @ Sentosa Cove have eased 26.4% since the third quarter of 2007.

Prices at Scotts Square likewise fell by 3.6% between their peak in Q3 2007, and Q2/Q3 2008.

The drop in prices was muted by the thin transaction volume. There were only about 10 transactions for each project in Q2/Q3 2008.

Statistics by an international consultancy show that prices of luxury apartments in Districts 9, 10 and 11 have fallen by 12% to 13% since early 2008.

Speculators who bought luxury homes under the now-defunct deferred payment scheme (DPS) may hasten their sale before the completion of more new condos next year. After all, historical trend does not weigh in their favour as during the Asian Financial Crisis, the official URA price index fell 40% from Q2 1997 to Q4 1998.

So, for these speculators, the risks of slipping into negative equity escalate each day as more TOP occurs from Q3 2009 onwards.

[B.3] Q3 Primary home sales continue to worry

The overall performance of the new home market in the past nine months has been a faithful reflection of the jitter, confusion and anguish that pervaded the entire financial market. As the financial crisis deepened in October 2008, the new home market bore the full brunt of the negative developments. With the latest round of stock market massacres in late October 2008, investors’ have been paralysed by fear. Many prospective buyers/investors have shelved their housing/investment plans altogether. It is now doubtful that the whole year sale volume would exceed 5,000 new homes.

For the new home market, the prospect looks grim for the next couple of quarters.


§ Performance of Private New Home Sales in Core Central Region (CCR)

Out of the 182 brand new condo projects on sale in the Core Central Region, only 16 projects had some sales. In all, the total new units sold in CCR in September 2008 were 70.

Finding – Median prices for new home SOLD in CCR in September dropped by 5.66%

When compared with the median prices of new home sold in January 2008, which was between $742 psf and $3,389 psf, the current median prices of new home sold in September was between $1,243 psf and $3,197 psf; and this represents a drop of 5.66% in median prices.

§ Performance of Private New Home Sales in Rest of Central Region (RCR)

Out of the 123 brand new condo projects on sale in the Rest of Central Region, only 20 projects had some sales. In all, the total new units sold in RCR in September 2008 were 224.

Finding – Median prices for new home SOLD in RCR in September dropped by 5.56%

When compared with the median prices of new home sold in January 2008, which was between $653 psf and $2,309 psf, the current median prices of new home sold in September was between $578 psf and $2,086 psf; and this represents a drop of 5.56% in median prices.

§ Performance of Private New Home Sales in Outside Central Region (OCR)

Out of the 136 brand new condo projects on sale in the Outside Central Region, only 26 projects had some sales. In all, the total new units sold in OCR in September 2008 were 82.

Finding – Median prices for new home SOLD in OCR in September dropped by 2.6%

When compared with the median prices of new home sold in January 2008, which was between $601 psf and $1,293 psf, the current median prices of new home sold in September was between $476 psf and $1,259; and this represents a drop of 2.6% in median prices.

[B.4] Secondary home market huffed and puffed in Q3

Likewise, secondary sale of private properties has hit a slippery path, with sales volume going down from 1,055 deals in July 2008 to 352 deals in October 2008, with no reprieve in sight. The figures below show the similar lacklustre performances of the private secondary market as its primary market counterpart.


[B.5] Fewer sub-sales and lower profit

There were a total of 462 sub-sales in Q3, compared to 518 such deals in Q2. In percentage terms, sub-sales accounted for 11.6% of all sale transactions in Q3, compared to 12.0% in Q2.

In the same period, the number of sub-sales in CCR accounted for 24.1% of total transactions in this area, compared to 22.0% in Q2. In RCR, it was 11.6%, higher than the 11.1% in Q2; while in OCR, sub-sales took up 7.3% of all deals, lower than the 8.5% in Q2.

§ Dwindling sub-sale profits

So far this year, a vast majority of 97% of sub-sale deals have resulted in profits. But the profits seen in Q3 were very much smaller as property prices started to hit the slippery patch.

In Q3, profitable sub-sellers made an average of $323,420, but this was because a single deal which turned in $6.7 million profit from the sale of a penthouse at The Sail at Marina Bay had jacked up the average figure. Without the abnormality, the average sub-sale gain was $301,784. This was about almost 40% lower than the average profit in the first half of the year.

On the other hand, sub-sale losses for Q3 averaged $76,820 for each negative sale. A unit at Watermark Robertson Quay chalked up the biggest loss of $207,552, while units at Soleil at Sinaran, 8 at Mt Sophia, and One Amber were also sold at losses of more than $100,000 each.


[B.6] Rents are marginally down in Q3

The latest data released by Urban Redevelopment Authority (URA) in October 2008 showed rents of most property types marginally down in Q3 2008. This may signal the beginning of a gradual down trend in rents.

In Q3, the private residential rents dropped by 0.9%; office rents were down by 0.8%; and rents for retail space cheaper by 0.6%. Bucking the down trend was industrial rents which went up marginally by 0.1% in the same period.


(C) The performance of Non-Residential Property segment

Due to the desperate financial situation in the United States and Europe, many foreign companies in Singapore are either cutting back on their expansion plans, or are giving up their queue position in the ‘wait listing’ for the spanking new offices to be completed later next year. With such a cautious mood ongoing from Shenton Way to Orchard Road, the only way office and shop rents can go is further South.

[C.1] Price for office property drop by 2% to 3%

In Q3 2008, capital values of office properties fell 2% to 3% ‘quarter-on-quarter’ in areas such as Marina Centre and Anson Road/Tanjong Pagar as demand softened. Some redevelopment projects scheduled to start work this year, such as International Factors Building, Robinson Tower and Marina House, have been put back into the leasing market. This will provide further impetus to the downward slide of office rents.

At the same time, due to the financial crisis that is raging in the US and Europe, office vacancies continue to rise. Grade A office vacancy has doubled in Q3 2008, rising from 0.6% in the previous quarter to the current 1.2%. The increase in vacancy also contributed to the downward pressure on office rents.

[C.2] Both rents and sale prices for retail space eased in Q3 2008

The overall rentals for shop and retail space in Singapore, based on leases which had commenced, decreased by 0.6% in Q3 2008, as compared with the increase of 5.2% in Q2 2008.

The median rental for shop space in the Orchard Planning Area (Orchard), Rest of City Area (RCA) and Outside City Area (OCA) are also down marginally to S$10.99, S$6.83 and S$5.68 psf pm respectively in Q3 2008.

Average prime first-storey monthly rents came to $42.40 psf in Orchard/ Scotts Road, $27.10 psf in other city areas and $33.70 psf in suburban areas. However, with ample supplies of retail space in Orchard Road, average rents for retail space look set to ease from 2009 onwards.

Meanwhile, the Monetary Authority of Singapore (MAS) said in its latest macro-economic review that retail sales volume fell 1.5% year-on-year from June to August, due to cautious local spending and lower demand from tourists. The central bank added that retailers could see slower business towards Christmas and into next year.

[C.3] Factory space bucking gloomy trend

On the other hand, demand for industrial space remains strong with business park occupancy averaged 92.5% in Q3, up 2% from the previous quarter.

Despite the gloom and doom in the residential property segment, strata-titled factories are doing just fine. The average capital value of 60-year leasehold strata-title factory units rose about 2.3% from Q2 to $309 psf and $225 psf respectively for ground- and upper-floor units.

The heightened activities in the light industry sector have been caused by active pre-letting of business park space by financial institutions.

The average monthly rent for factory space rose 3.2% from Q2 to $1.60 psf for ground-floor units and 3.8% to $1.35 psf for upper-floor units. The average monthly rent for warehouses stayed flat at $1.55 psf and $1.25 psf respectively for ground and upper-floor units.


(D) The performance of Collective Sales

[D.1] Parkway Centre going for $1,000 psf ppr

Parkway Centre in Marine Parade has received the mandatory 80% majority consent to go on collective sale for an indicative price of about $160 million. This works out to about $1,000 per square foot per plot ratio.

The 99-year leasehold Parkway Centre, which is directly opposite Parkway Parade, has three retail shop units and 107 office units. The retail rental is around $25 to $30 psf per month, and the office rental, $4 to $5 psf per month.

So far this year, the only successful collective sale was Katong Mall, which was sold in July 2008 for $865 psf ppr. In other words, the asking price of Parkway Centre is around 15% higher than the sale price of Katong Mall.

[D.2] Regent Court collective sale may go through after all

The High Court has ruled that the Strata Titles Board (STB) must continue to hear the appeal by the Regent Court’s collective sale committee against the STB’s decision.

The collective sale deal of Regent Court was struck in April 2007 for $34 million.

In December 2007, the STB rejected the application for a sale order citing that one of the objectors had suffered financial loss. Financial loss was defined as the sale proceeds not being sufficient to cover a property owner’s initial purchase price.

Appealing against the rejection, the sale committee revealed that the purchaser was willing to cover the losses of the individual objector. But the STB did not consider the merit of the argument.

(E) Foreign Interest in Singapore Real Estate

[E1] Foreign banks remain committed to Singapore

As more and more people see American banks and financial institutions as poisoned chalices, the firms in Asia are busy trying to counter all the negativities.

JP Morgan took pains to assure that their Asian operations are not affected by the turmoil in the US.

Meanwhile Citi said it is committed to staying invested in Singapore, which is a key market for Citi globally. The US bank has committed $220 million to integrate its back-office operations at Changi Business Park.

In the same vein, Barclays said it will continue to grow its business in Singapore and the wider Asia-Pacific region when opportunities arise.

[E2] German fund bought Changi Business Park building

The Applied Materials Building in Changi Business Park Vista has been sold to German fund manager Union Investment Real Estate for $63 million.
The 198,000 square foot industrial facility is sold on a 30 plus 30-year lease, with a sale-and-leaseback agreement.

Union Investment entered the Singapore market in 2007 with its purchase of Vision Crest's office block and the House of Tan Yeok Nee next door in the Penang Road/Clemenceau Avenue area for a total of $260 million.

[E.3] Largest commercial buildings buyer in trouble

Macquarie bank shares had lost some 41% of their value from mid September 2008. The bank has significant investments in Singapore, including all of Macquarie's operating groups, and the HQ of its Asia corporate advisory team here.

The bank's independently managed private equity real estate company Macquarie Global Property Advisors (MGPA) was the biggest foreign investor in Singapore's property market in 2007.

Earlier this year, MGPA said that it will spend about $2 billion building a 2.6 million sq ft commercial complex on two development sites at Marina View that it clinched last year. With the sites having costs close to $3 billion, the total investment will come to around $5 billion. It is also the largest foreign broker and the largest issuers of warrants.

(F) News on Government Land Sale (GLS) Programme

In October, another opportunistic bid was snubbed by URA. It was the fifth ‘sole bid’ that was rejected by URA. More frequent rejections by URA in its tender exercises, as well as more instances of sole bids received at respective tender exercises are symptomatic of a waning market.

[F.1] Two bidders for Ubi industrial site

In the state land tender of an industrial site at Ubi Avenue 4 in early October 2008, the URA received only two bids for the 123,693 sq ft site which has a maximum plot ratio of 2.5.

Eventually, it was Sim Lian Land which won the award at $26.3 million, or about $85 per sq ft per plot ratio (psf ppr). The winning bid was 13.6% higher than the only other bid of $75 psf ppr.

[F.2] Only one bid for URA industrial site at Kallang Pudding

The URA tender for an industrial site on Kallang Pudding Road received only one bid in early October 2008.

Orion-Four Development has put in a $10.8 million bid for the 61,819 square feet site with a 2.5 plot ratio. If awarded, the developer’s cost will be around $69.88 per sq ft per plot ratio (psf ppr). It will be much cheaper than the $85 psf ppr Sim Lian had paid for the Ubi Ave 4 industrial site earlier this month.

The previous successful bid prices for leasehold industrial sites in the vicinity were $88.74 psf ppr for a 60-year leasehold industrial site at Ubi Avenue 4/Ubi Road 2 in March 2008; and $142 psf ppr for an industrial site in Playfair Road in Ubi/Paya Lebar/Eunos area in February 2008.

[F.3] Sole bid for URA hotel site at Kallang/Jellicoe

A Hotel 81 subsidiary has put in the sole bid of $51 million for the hotel site at Kallang Road/Jellicoe Road in a state land tender conducted by the URA. If awarded, the developer’s costs will be around $249.56 per square foot per plot ratio (psf ppr).

With a plot ratio of 4.5, the future hotel will have a permissible gross floor area (GFA) of 204,363 sq ft.

[F.4] Tanah Merah condo site received keen bids

A 99-yr lease condo site next to Tanah Merah MRT attracted seven bids when it was put on sale by the URA. The top bid of $84 mil or $282 psf was from TID, a joint venture between Hong Leong Group and Japan's Mitsui Fudosan.

The 106,299 sq ft plot has a 2.8 plot ratio and can be developed into a condo with 240-250 units averaging 1,200 sq ft. The breakeven cost for a new condo is likely to be $700-750 psf, translating to possible sale prices ranging from $800-850 psf.

[F.5] Opportunistic bid for Mohd Sultan office site rejected

URA has snubbed the sole bid - submitted by RSP Architects Planners & Engineers - for a transitional office site in Mohamed Sultan Road, citing low tender price.

The sole bidder has put in an opportunistic bid of $4.65 million, which was equivalent to $46.67 per sq ft per plot ratio (psf ppr). The site area is 66,482 sq ft with the maximum permissible gross floor area (GFA) of 99,727.5 sq ft.

(G) Overall performance of the HDB resale market

Despite the general gloom in the private property sector, the HDB resale market is a picture of boom in Q3 of 2008. Below shows the encouraging statistics, including:

§ The HDB resale price index rose by 4.2% in Q3 when compared with Q2.
§ Resale transactions rose by about 4% in Q3 to 8,110 cases, from about 7,760 cases in Q2 2008.
§ The overall median transacted prices for HDB resale flats are also on a steady climb.


[G.1] Cash-Over-Valuation (COV) dropped as resale volume rose

The overall median Cash-over-valuation (COV) prices also dropped, except for 3-room flats. As the resale prices and resale transaction volume rose, the cash portion reduced correspondingly. This may be a result of HDB market valuation prices being more responsive to the market condition.

Cases requiring COV constituted 89% of all resale transactions in Q3, with 11% of resale flats sold at or below valuation.

[G.2] HDB flat dwellers’ share of private home purchases rose to 34%

HDB upgraders' share of private home purchases rose to 34% in Q2 2008 from 28% share in Q1 2008. This is the highest quarterly figure in at least three years. For instance, in absolute terms in Q2, HDB upgraders picked up the most number of units in The Verve in the Balestier area - 36 - followed by 32 at Stadia at Yio Chu Kang Road in the primary market (from developers). Proportionately, The Quartz was the most popular with 86% of its buyers being previous HDB flat dwellers.

HDB upgraders have also been more active in Q2 in the secondary market, where prices have dropped by as much as 10 to 12 % in Q2 2008 over Q1 2008 in some instances. The number of private apartments/condos changing hands in the subsale market bought by those with HDB addresses increased 52% Q-on-Q to 152 deals in Q2 2008.

[G.3] Sub-letting rents movement uneven in Q3

For HDB flats whose owners have received the approval from the authority for ‘whole flat subletting’, the overall median rents rose by between $50 and $100 for different flat types in Q3. However, when compared to the same quarter of last year, the increase in the overall median rents was more pronounced by between $200 and $400 for different flat types.

However, subletting transactions fell about 4% from about 4,120 cases in Q2 to about 3,960 cases in Q3.

The total number of HDB flats approved for subletting rose to about 21,400 units, compared to about 20,200 units in Q2.

[G.4] Resale transaction in October 2008 dropped by 105 cases

The total resale HDB flat transactions in October dropped by 105 cases (or 4.21%) to 2,389 transactions. When compared with October 2007, this October’s performance was also poorer by 74 transactions. A couple of reasons may have contributed to the drop in HDB resale transactions, including:

(4.1) The stock market turmoil in October 2008 may have terrified some prospective buyers into a more reflective mood. After all, this was one of the worst stock market meltdown in three decades.

(4.2) Over the past one year, the absolute price quantum of resale flats has gone up by more than 10% across the board, and many prospective buyers might have been put off by the high asking prices. This can be seen from the even drop pattern involving all flat types.

The percentage drop in 3-room flat transactions was 2.45%, while the drop for the other flay types are 2.71% for 4-room flats, 7.83% for 5-room flats, and 4.71% for E-flats.