Singapore Property: 28 Shades of Red
The private condo market has lost more than $15 billion in market value since its peak in prices in January 2014.
SRX Property used X-Value, its valuation algorithm, to calculate the value of all transacted flats (recorded) at the market’s peak and then compared it with the value at 31 December 2014.
At the peak, the measurable market value was about $392 billion while it was $377 billion at the end of 2014. The difference is $15 billion and counting as prices continue to drop.
Homeowners in different regions have suffered disproportionately.
According to SRX Property, the worst hit regions, as designated by the darker red, include Districts 13, 1, and 28.
In District 13, which consists of the Macpherson and Braddell neighbourhoods, 38% of homeowners would sell at a loss if they sold at their unit’s X-Value.This would translate to a market loss of about $ 92 million.
40% of homeowners in District 1, which consists of the Temasek Boulevard and Raffles Link neighbourhoods, would sell at a loss of about $ 516 million.
The Seletar area, or District 28, would have the largest percentage of loss makers at 44%, which translates to a market loss of about $117 million.
In contrast, residents in District 26, home to the Singapore Zoo and Night Safari, are in relatively good shape. Only 9% would sell at a loss if they sold at their unit’s X-Value. However, the loss would still be significant in dollar terms at more than $21 million.
So why have the Cooling Measures disproportionately impacted homeowners, as represented by their regions? Why are the 28 Shades of Red so discombobulated with no clear pattern?
It can’t be location. District 28 (dark red) and 26 (pink) are next door to each other.
It can’t be price per square foot. District 1 is more than twice as expensive as District 28, yet they are both dark red.
The explanation for the 28 Shades of Red goes to the very heart of real estate.
Real estate is local. As such, one-size-fits-all policies like the Additional Buyer Stamp Duty (ABSD) and Total Debt Servicing Ratio (TDSR) will impact homeowners differently and the blood splatter pattern is unpredictable in advance.
Each neighbourhood, project, and unit has different sets of circumstances. They vary in age, tenure, size, floor level, unit, spatial direction, and proximity to key amenities (i.e., schools, transportation hubs, parks, etc.).
Within each neighbourhood, homeowners have different circumstances, including TDSR profiles.
The real estate markets in those neighbourhoods are in different states of flux. Some are hot, some cold, and some warm.
Homebuyers who bought into the hot markets prior to the Cooling Measures are the ones who got the worst freezer burns and now represent the reddest of the 28 Shades of Red.
Sam Baker is co-founder of SRX Property, an information exchange formed by leading real estate agencies in Singapore to disseminate market pricing information and facilitate property listings and transactions. For more details on the data and calculations used in this article, visit SRX.com.sg/research.