SINGAPORE (Apr 2): Prices of non-landed residential property in Singapore’s prime district, or Core Central Region (CCR), fell 2.9% q-o-q in 1Q19 – dragging the private residential property price index (PPI) down for a second consecutive quarter.

“This weakness does not come as a surprise to us, given that the CCR was most likely to be adversely impacted by the set of property cooling measures introduced in July last year,” says OCBC Investment Research in a Tuesday report led by analyst Andy Wong Teck Ching.

“This was the largest quarterly negative magnitude registered since 2Q09, when prices fell 5.2% q-o-q,” Wong adds.

See: Singapore 1Q private housing price index dip q-o-q for second straight quarter in flash estimates

Prices for non-landed residential property in the Rest of Central Region (RCR) dipped slightly by 0.2% q-o-q, while prices for non-landed homes in the Outside Central Region (OCR) held steady.

According to URA flash estimates, PPI declined 0.6% q-o-q in 1Q19, following a 0.1% q-o-q dip in 4Q18.

“The landed property segment was resilient during 1Q19, with an uptick of 1.1% q-o-q, while the non-landed property segment suffered a decline of 1.0% q-o-q,” Wong notes.

See: Singapore luxury home prices drop most in a decade on curbs

Moving forward, the analyst says recent URA land tenders have showed signs of “more rational bids” amid the property cooling measures.

Tenders for two sites that were recently closed – a residential land parcel at Sims Drive and a residential land parcel with commercial at first storey at Middle Road – were won with top bids that worked out to per square foot (psf) per plot ratios (ppr) of approximately $732.0 and $1,458.3, respectively.

In contrast, Wong says the nearby Duo Residences registered average selling prices (ASPs) of around $2,211 psf for transactions done after the July 2018 cooling measures, while the higher-end South Beach Residences garnered average ASPs of approximately $3,371 psf.

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“We keep our private residential price growth forecast of -3% to 2% for 2019, but highlight that the full-year figure is likely to come in at the lower-end of our projection,” Wong says.

OCBC’s preferred picks within the sector are UOL Group and CapitaLand.

The brokerage has “buy” calls on both, with fair value estimates at $8.45 and $3.98, respectively.

As at 12.20pm, shares in UOL are trading flat at $7.11 while shares in CapitaLand are trading 1.08% down at $3.65.