Home sales remain strong

More than 1,000 private homes sold for the second month in a row in March.

THE bumper private property sales recorded in February were no fluke.

For a second straight month, home hunters defied the weakening economy to buy more than 1,000 units last month.

Property consultants say buyers are attracted to what they regard as good buys in the moderately priced mass market.

Still, they warn that these strong buying levels are probably not sustainable.

Last month, property developers sold 1,220 new private homes, just shy of the 1,332 units sold in February.

It was the first time in over a year that the market has seen two consecutive months with more than 1,000 units sold. Sales for both months were a stunning contrast to the dismal 108 in January.

Another striking figure: First-quarter new private home sales hit 2,660 units, representing 62 per cent of all new homes sold during the whole of last year.

February sales – boosted mainly by two new launches Alexis and Caspian – were the highest since August 2007.

Figures compiled by the Urban Redevelopment Authority also showed 832 new housing units were launched last month, compared with 1,072 units in February and just 204 units in January.

Most units sold last month were in the mass market, along with a few city-fringe small-format apartments at condominiums such as Domus and The Mercury.

HDB upgraders were the hottest group of buyers. CBRE Research said that last month alone, they bought 550 to 600 units at mass market projects such as Caspian, Double Bay Residences, Kovan Residences, Livia, Mi Casa and The Quartz at median prices of $610 per sq ft (psf) to $740 psf.

A survey of first-quarter caveats lodged for this market segment indicated an average price of $695,000, said CBRE Research executive director Li Hiaw Ho. ‘This is probably a good time for HDB home owners to upgrade to private property as the price gap between private properties and HDB resale flats has narrowed.’

Said Colliers International director for research and advisory Tay Huey Ying: ‘Developers have lowered their price expectations for new launches and generally cut prices of unsold units. Buyers are biting as there is pent-up demand.’

The top three sellers in March were Double Bay Residences, Mi Casa and The Arte. About 85 per cent of units sold last month were priced below $1,000 psf, said PropNex chief executive Mohd Ismail.

The high-end showed some life with 70 units launched and some sales, including one Orchard Scotts unit at $2,220 psf.

But overall, only 100 prime units were launched in the first quarter, or just 4.7 per cent of all units launched, well down from the 39.4 per cent of all units launched in the fourth quarter last year.

Knight Frank director of research and consultancy Nicholas Mak said this was partly due to the retreat of foreigners from the luxury market.

Preliminary data suggests foreign deals stood at 16.8 per cent in the first quarter – a level last seen when Sars badly hit the market in 2003, he said.

Market analysts say it is a good start to the year, but they do not expect the strong buying to continue long-term.

‘In the short term, this rate of buying can continue provided developers lower or maintain their prices,’ Chesterton Suntec International’s research and consultancy head Colin Tan said of March sales.

But in the long term, it is not sustainable, he said. ‘The last time the market sold so many new units (14,811 units) was in 2007. That was when the deferred payment scheme was available. And it has since caused indigestion in the top end of the market.’

Unless the Singapore economy and employment market improve significantly this year, only 6,000 to 7,000 new private homes are expected to be sold, said Mr Mak.

He said healthy demand for mass market homes is likely to continue only as long as average HDB resale prices do not fall by more than 7 per cent year on year.

‘Many in the mass market segment are buying now and banking on their future earnings to service their loans as they are afraid of missing the boat,’ said Mr Mak

 The Straits Times  April 16 2009

Investors pick up higher-end condos ..

Value buys in prime areas available even though property market still weak.

SOME high-end condominiums recorded sparkling weekend sales even though the overall property market was generally quiet in terms of new launches.

Of the two new previews, Illuminaire on Devonshire sold out its 72 units at $1,630 to $1,730 per sq ft (psf), while Verdure in Holland Road sold 14 units of 34 launched units at $1,400 psf.

The 12-year-old Gallop Gables saw far stronger than expected demand, with investors picking up 28 units, even though they are about $3 million or more each.

Previously, the new projects that have attracted fairly strong interest, given today’s climate, were not in such prime areas. But some investors may be looking around now that the market has fallen quite a bit.

Mr Peter Ow of Knight Frank, which is marketing Verdure and Gallop Gables, said the response at these two sales showed individual investors are back.

‘These buyers are savvy investors who are already staying in prime areas,’ he said. ‘Generally, the property market is still weak, but there are value buys around. And people are beginning to see value in well-located projects.’

Of 14 Verdure units that Bukit Sembawang has sold during the preview, a few are penthouses. While the overall project is priced at $1,350 psf on average, the 14 were sold at an average of $1,400 psf, or from $1.5 million to $2.8 million.

A scheme offering interest absorption was available without any extra charge. The project, which has 68 units, will be launched this weekend.

Over at Gallop Gables near Botanic Gardens, Straits Trading sold 26 units – 16 more than its target. It had offered only 10 units with a guaranteed rental yield of 7 per cent for two years. The rest were purchased without the 7 per cent guarantee, but mostly with existing tenancies offering a rental yield of 3 to 5 per cent.

The buyers paid between $3,075,200 and $3,840,000, or an average price of $1,220 psf for the units, which averaged about 2,800 sq ft.

The buyers were mainly residents ranging in age from the mid-30s to the late 70s who bought for investment purposes, said Straits Trading, which had earlier said the sales would generate cash to allow it to invest in distressed assets.

A few buyers, it added, said they may live in the apartments after the end of the two-year rental guarantee period.

At Illuminaire, the affordable price drew both investors and speculators, industry experts said. As it has only one- and two-bedroom units, ranging in size from just 441 sq ft to 721 sq ft, the total price was kept low – from $749,000 to $1.21 million.

EL Development managing director Lim Yew Soon said he had changed the design of the project from a 36-unit development to a 72-unit one last September. By then, a three-bedroom showflat had already been completed – and had to be reconfigured into a smaller unit.

‘I realised the market would prefer small units,’ he said.

Mr Lim, who bought one unit for himself and kept two for business associates, said most buyers were keen on the interest absorption scheme, which was offered at no additional cost.

Some buyers also liked the unusual automated car parking system. There are two car lifts that will store cars in an adjoining multi-storey carpark block.

 
The Straits Times,  April 2009

Private home prices take double-digit dive

Private home prices plunged 13.8 per cent in the first three months of this year – a record quarterly drop as developers and other market players slashed their expectations.

It was the third quarterly fall in prices – and much steeper than the 6.1 per cent drop in the preceding Q4 2008, according to advance estimates released by the Urban Redevelopment Authority (URA) yesterday. Private home prices dipped 1.8 per cent in Q3 2008 after 17 straight quarters of growth.

Prices of resale HDB flats, which seemed to defy gravity and grew throughout 2008, also fell in Q1 2009 – by 0.6 per cent – after nine quarters of growth.

Analysts were expecting a significant drop in private home prices, but the actual fall was bigger than thought. In recent months, developers have cut the selling prices of new homes and sellers of secondary properties have also trimmed their asking prices.

‘The fall is not surprising as a lot of developers have reduced prices to move new units, and in the resale market, people are now asking for more reasonable prices,’ said DTZ’s senior director Chua Chor Hoon.

DMG & Partners Securities’ analyst Brandon Lee said that new projects and units in previously launched but unsold projects, were being launched or relaunched at 10-30 per cent discounts to the original intended selling prices. Also, there were distressed sales in the secondary market.

Aggressive price cutting by developers seems to have paid off. An estimated 2,100-plus new homes were sold in Q1 – the highest level since the market was hit by the US mortgage crisis in the last quarter of 2007 and more than four times the number of new units sold in Q4 2008. But the pick-up in sales volume was at the expense of prices.

URA’s non-landed private home price index for the Core Central Region, which includes the prime districts, financial district and Sentosa Cove, fell 15.2 per cent quarter-on-quarter in Q1. In the Rest of Central Region, prices fell 17.2 per cent. And in the Outside Central Region, which is a proxy for suburban mass-market locations, they fell 7.5 per cent.

The drop in HDB resale prices took some observers by surprise, as analysts tracking the sector had said that they would continue to rise in the first half of this year, though at a slower pace than in 2008.

‘HDB resale prices increased some 32 per cent since Q1 2007 before reaching a new peak in Q4 2008,’ said ERA Asia-Pacific associate director Eugene Lim. The marginal decrease in Q1 shows HDB resale prices are now moving in tandem with the deteriorating economic and unemployment conditions.

Analysts said that the main cause of the fall in HDB’s resale index is the lower cash-over-valuation (COV) amounts that buyers are now willing to pay. ‘The slight dip is probably due to more buyers of HDB flats being resistant to paying high levels of COV,’ said PropNex chief executive Mohamed Ismail. ‘While demand for HDB resale flats is evidently still strong, sellers in this economic climate are realising the weaker buying power of consumers.’

Private home prices are expected to continue falling in the rest of the year. ‘While the fall in prices of private residential properties in the first quarter was acute, the drab economic situation is expected to continue to place downward pressure on home prices in 2009,’ said Nicholas Mak, director of research and consultancy at Knight Frank.

But the pace of decline is expected to taper off. ‘Developers have already made a quantum leap in reducing prices in Q1 2009 and although further declines in launch prices can be expected, the incremental drop is likely to be marginal and more gradual,’ said Tay Huey Ying, director for research and advisory at Colliers International. Ms Tay expects the rate of decline in the URA price index to taper off to about 8 per cent in Q2 2009 and then 3-5 per cent for each of the subsequent two quarters.

For the full year, analysts put the overall drop in private home prices at 20-30 per cent, with homes in the suburban areas taking the smallest hit.

The fall in HDB prices, on the other hand, is expected to pick up steam in the rest of 2009. Analysts expect that HDB resale prices will fall by between 5 and 15 per cent for the whole of 2009.

Source : Business Times – Apr 2009

TOP chance to pick up condo bargains

Buyers now have more choices as launches return to the market. There is also no lack of supply in the secondary market, where more projects – including several big ones – will obtain temporary occupation permits (TOPs) by the end of this year.

Speculators who bought units at The Sail may want to sell them now. — LIANHE ZAOBAO FILE PHOTO

The sellers of projects yet to obtain TOP are often short-term investors, and in this present climate some may offer real bargains if they have an urgent need to offload their properties, experts said.

A project’s TOP date is when those who had bought on deferred payment will have to pay for the bulk of the purchase price.

The deferred payment scheme was seen as encouraging speculation as buyers could profit by reselling their homes before the TOP date without much capital outlay. It was scrapped in late 2007.

‘Most times, those who bought on deferred payment are usually the investors,’ said Mr Colin Tan, Chesterton Suntec International’s head of research and consultancy.

Although not many bargains have surfaced, more could come, experts said. The 104 caveats lodged in the first two months of this year – for projects that have yet to obtain TOP – showed prices are coming down, but only gradually, said Mr Tan, citing Urban Redevelopment Authority data.

Of the 104 deals, 24 were for City Square Residences at $664 per sq ft (psf) to $911 psf, compared with its starting price of $560 psf in 2005. Another 20 deals were done at The Centris at between $427 psf and $639 psf, compared with its 2006 launch price of $550 psf.

Singapore bankers are reluctant to repossess properties when property prices have not fallen steeply, Mr Tan said. ‘As Singapore is still not in ‘deep recession’ – although we are moving towards it – these investors are able to rent out their properties and collect rent,’ he said. ‘So long as banks are receiving some kind of payment, they are not willing to force the issue.’

Mr Tan said he foresees a gradual decline in property prices for the next three to four months. The shrinking rental market may have a greater impact on the market thereafter, he added. ‘For those waiting for ‘bargains’, you’ll have to be patient and wait a little longer,’ he advised. ‘At the moment, while the rental market is declining, it is still some 15 to 20 per cent higher than before the run-up in the market.’

A property expert, who declined to be named, said: ‘Buyers may want to look at projects where there is a great deal of speculative element, such as Marina Bay Residences and The Sail, where many people went in blindly. Some of them may now want to let go of their units.’

So far this year, two high-floor Marina Bay Residences units were sold in January at $1,528 psf and $1,638 psf, while two units at The Coast at Sentosa Cove were sold last month at $1,250 psf and $1,500 psf.

Back in late 2006, Marina Bay Residences was sold out in three days at an average apartment price of $1,850 psf or up to more than $2,700 psf, while The Coast initially sold for $1,500 psf on average.

This year, the bigger projects that are expected to obtain TOP include The Centris in Jurong West and Casa Merah in Tanah Merah.

In the Amber Road area where many new developments were launched in the past few years, One Amber will obtain TOP by year end. It will join two recently completed big condos, The Esta and The Sea View, and a few others under construction.

In Balestier, UOL Group said it expects the 180-unit Pavilion 11 in Minbu Road to obtain TOP in the second half of the year.

The 53-unit The Centrio in Irrawaddy Road – launched in May 2007 at $1,025 psf – is also expected to do so by the end of the year.

A nearby project, the 151-unit Montebleu, launched in March 2007 at $980 psf, will obtain TOP early next year. At the same time, there are new launches in Balestier, including The Mezzo and Domus.

In the prime area, Hiap Hoe expects to obtain TOP for its 46-unit Cuscaden Royale by the end of the year or early next year.

‘TOP projects are much sought after by owner-occupiers because buyers can move in immediately into a brand-new property,’ said Ms Kellie Liew, executive director of projects at HSR property group.

Prices in quite a few of these projects, such as Southbank, have dropped a fair bit, she said.

Southbank in North Bridge Road will obtain TOP next year. So will The Riverine by the Park nearby.

Savills Residential director Phylicia Ang said the secondary market will have bargains but they may not be easy to spot. Those with little time to spare may find new launches a better bet, she said.

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Potential for good deals  

‘Buyers may want to look at projects where there is a great deal of speculative element, such as Marina Bay Residences and The Sail, where many people go in blindly.. Some of them may now want to let go of their units.’ - A PROPERTY EXPERT who declined to be named

Source : Sunday Times – Mar 2009

 

S’pore tumbles 30 places on global home price index

HOME prices in Singapore have been among the hardest-hit worldwide, with the city state ranking 34th out of 42 countries in Knight Frank’s Global Home Price Index. The index, based on the latest government and central bank data, tracks price movements quarterly. It shows that in Q4 2008, private housing prices here fell more than 6 per cent year on year, after rising more than 30 per cent a year earlier – the fourth-fastest rise worldwide.

Singapore’s dramatic drop in the rankings is only second to that of Iceland, which plunged 31 places after a 14 per cent dive in prices to 38th position in rankings.

Prices rose fastest in Dubai (up 59 per cent), followed by Russia (19.7 per cent) and the Czech Republic (19.6 per cent).

Countries where prices fell the steepest were Latvia (down 33.5 per cent) and the UK (14.7 per cent).

Although Dubai was the strongest performer in 2008, Knight Frank said much of the gain could be ‘wiped out’ this year. ‘No market will escape unscathed from the global financial crisis, although the scale of the impact will vary according to the structure not just of the housing markets themselves but also the underlying economies,’ it said.

More than 80 per cent of locations in the firm’s global index recorded price falls in the final three months of 2008, compared with 27 per cent in Q4 2007. Prices increased more than 10 per cent in seven countries in 2008, but values have now started to fall in six of these.

Knight Frank’s head of international residential research Nicholas Barnes said: ‘Predicting how much further markets will fall during 2009 is virtually impossible.’ He said it does not follow that a country that entered the downturn ahead of another country will recover faster.

In Singapore, Knight Frank said the prime Core Central Region suffered the biggest quarter-on-quarter price fall in Q4 2008 at 6.5 per cent. In the mid-tier Rest of Central Region, the drop was 6.2 per cent. And in the mass-market segment, it was 5.9 per cent.

A separate report by CBRE Research shows luxury home prices in Singapore – currently the highest in Asia – fell 13 per cent quarter on quarter in Q4 2008 to US$1,388 per sq ft. In Hong Kong, they fell a steeper 31.4 per cent to US$1,314.5 psf, while in Ho Chi Minh City the drop was 9.8 per cent to US$427 psf. In Thailand, Indonesia and the Philippines, luxury home prices remained unchanged.

CBRE said that in Singapore’s luxury condo segment – units costing $2,500 psf or more – only about 140 units were sold in 2008, way down from 900 in 2007.

Foreigners are typically the main buyers of luxury and investment-grade properties here, but CBRE said the number of foreign buyers in 2008 plunged 80 per cent from 2007. By end-2008, luxury prices here had fallen by 30-35 per cent year on year.

Luxury rents were hit by the weak market sentiment and an overhang of new supply. In Singapore, the average figure eased 3.4 per cent to US$3.96 psf per month. In Hong Kong, it fell a steeper 23 per cent to US$4.38 psf per month.

Source : Business Times – Mar 2009