Private home buyers lured by attractive resale deals
Business Times: Sat, Jul 28
PROPERTY buyers have been wising up to more attractive deals
for private homes in the secondary market compared with pricey launches by
developers of late.
Latest government figures show a 58 per cent or 1,281-unit
quarter-on-quarter increase in resales or secondary market transactions of
completed private homes to 3,487 units in Q2, which made up for a decline of
17.2 per cent or 1,124 units in developer sales to 5,402 units from the record
Q1 volume of 6,526 units. The stronger resale demand probably led to prices of
completed non-landed private homes faring better than uncompleted ones in Q2.
Urban Redevelopment Authority's Q2 numbers also threw up
what could be an early sign of buyer-fatigue setting in for shoebox apartments.
The number of small-format units (up to 50 sq metres/538 sq ft) sold by
developers tumbled from 1,764 in Q1 to 1,038 in Q2. Their share of the total
number of private homes sold by developers also slipped from 27 per cent to 19
per cent.
DTZ' Southeast Asia chief operating officer, Ong Choon Fah,
said: "As quite a number of people have already bought small apartments,
demand may be starting to satiate for this segment. But the lower sales of
small-format units in Q2 could also be a function of launches; developers may
have minted fewer such units in Q2," said Mrs Ong.
Developers' sales of units priced up to $750,000 halved,
from 2,766 in Q1 to 1,435 in April-June this year. As a result, the share of
such units among total developer sales also slid from 42 per cent to 27 per
cent. ERA Realty Network key executive officer Eugene Lim said: "With new
homes selling at higher prices, the supply of units below $750,000 is
decreasing."
Market watchers also note that the authorities have
highlighted potential pitfalls of investing in small-format units - for
example, the substantial supply of these units and that their rental yields
could decline as more such units are completed.
At the same time, some agents have also put the spotlight on
sweet deals available in completed projects vis-a-vis new launches and this
could have diverted some house hunters to the secondary market.
"Bargain hunters have been combing the resale market for
the possibility of buying a property in Core Central Region (CCR) at almost the
same price as new homes sold in the Outside Central Region (OCR)," notes
Mr Lim.
CCR includes Singapore's choicest residential districts; OCR
refers to suburban locations where mass-market condos are located.
"In general, across all regions, as the sellers are
individuals rather than developers, it's quite possible to get good deals that
may be cheaper or comparable to new home sale prices. Even so, these sellers
would be making a profit," said Mr Lim.
Said DTZ's Mrs Ong: "Prices of new launches these days
are higher than existing projects in the vicinity and people are starting to
see value in these older projects."
Quarter-on-quarter, resale volume rose 86 per cent to 701
units in Q2 for CCR and by 54 per cent to 1,751 units in OCR. In Rest of
Central Region (RCR), the increase was 50 per cent to 1,035 units.
Such strong demand has helped to firm prices for completed
homes, as demonstrated in URA's non-landed private home price indices in all
three regions. In CCR, the price index for completed properties rose 2.2 per
cent Q-on-Q in the second quarter, against a 0.6 per cent price dip for
uncompleted properties. In both RCR and OCR, completed properties posted a 0.9
per cent price rise, surpassing a 0.1 per cent gain for uncompleted properties.
Sales momentum also picked up in Q2 for subsales - which are
also secondary market transactions but involve projects that have yet to be
completed; hence they are often seen as a gauge of speculative activity.
Though the number of subsales rose from 446 units in Q1 to
600 in Q2, most property consultants are not alarmed. They suggest the increase
could have emanated from those who bought properties around 2008/2009 exiting
their investment as the projects near completion. With a punitive seller's
stamp duty regime in place since January 2011 to deter short-term trading of
private homes, most observers don't rate the risk of another flare-up in
speculative activity as high.
In all, developers have sold 11,928 private homes excluding
executive condos (a public-private housing hybrid) in first-half 2012 - or 75
per cent of the 15,904 units they sold in the whole of 2011. Analysts predict a
full-year 2012 tally of 18,000-22,000, surpassing 2010's record of 16,292
units.
With the government continuing to roll out substantial land
sales in the face of strong demand for private residential properties fuelled
by low-interest rates and property's draw as a hedge against inflation, some
industry players expect prices to be flat in the second half.
"If economic conditions worsen, we could see see some
price softening next year," says Credo Real Estate executive director Ong
Teck Hui.
URA's benchmark private home price index rose 0.4 per cent Q-on-Q
in the second quarter, after declining 0.1 per cent in Q1.
Foreigners (excluding Singapore permanent residents) picked
up 8.3 per cent or 442 of the 5,313 uncompleted private homes developers sold
in Q2 - up from 402 units and a 6.2 per cent share in Q1. The Q1 numbers marked
a steep fall from foreigners' 17 per cent (or 601 units) share of developers'
Q4 2011 sales. Foreign buyers thinned after last December's introduction of the
10 per cent additional buyer's stamp duty on their residential property
purchases here. An industry player said the Q2 pick-up in foreign buying was
due to developers bringing projects overseas, with some offering incentives
like stamp duty absorption. "But some foreign buyers may be deterred from
the messages that foreigners are no longer so welcome in Singapore. So they're
asking: "Why should we invest here?" "
URA's private residential rental index rose 0.3 per cent
Q-on-Q in the second quarter, matching Q1's gain. Its office and shop rental
indices, however, dipped 0.5 per cent and 0.3 per cent in Q2. In the industrial
segment, rentals rose 4 per cent for flatted factories but dipped 2 per cent
for flatted warehouses. However, the All-Industrial property price index
galloped at a faster pace of 8.4 per cent in Q2 compared with Q1's 7.3 per cent
rise, which some analysts attribute to keen interest in strata industrial
properties.
URA's spokesperson said that from Q2 2012 onwards the
authority has worked with other government agencies to obtain more information
on floor area of new industrial units transacted and thus has been able to
include these transactions in the computation of its industrial property price
index.
Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
Email: marshe_inc@yahoo.com.sg
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)
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