Residential Market News Extract - 30 July 2012

'Good value' Loyang draws home buyers

Despite being in the far-flung area of Loyang and not close to an MRT station or other amenities, home buyers are turning to the area for its value for money.

New launches around Flora Drive, including Palm Isles and Parc Olympia, for instance, are averaging between $820 per sq ft (psf) and $880 psf.

That is markedly cheaper than homes in nearby Pasir Ris, which has more amenities, experts said. Pasir Ris' Ripple Bay and The Palette - both also 99-year leasehold projects - were both sold at an average of $900 psf.

Koh Brothers' Parc Olympia has moved over 180 out of 234 units released since its launch a fortnight ago. One-bedders at the 486-unit condominium start at $440,000.

Frasers Centrepoint's Palm Isles is around 70 per cent sold; one-bedders start from $530,000.

The 99-year leasehold Hedges Park, developed by Tripartite Developers - a joint venture between Hong Leong Holdings, City Developments and TID, is more than 75 per cent sold, with an average selling price of $880 psf.

Besides lower launch prices, resale prices in the area also appear to be more attractive than those of Pasir Ris and Tampines.

The freehold Azalea Park, on Flora Drive, achieved a median resale price of $704 psf, while freehold Ris Grandeur in Pasir Ris fetched $898 psf as of this year's second quarter.

In Tampines, 99-year leasehold The Tropica returned a median resale price of $832 psf.

But Flora Drive projects lose out in terms of rental yields, which hover from 3.8 per cent to 4.1 per cent.

Still, rental demand is buoyed by the nearby airport, Tampines Regional Centre, Changi Business Park and Japanese School, consultants said.

Source: The Straits Times – 30 July 2012

Private home buyers lured by attractive resale deals

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.

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.

"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.

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.

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.

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.

Source: Business Times – 28 July 2012

Rise in private, HDB resale transactions

More buyers have snapped up resale Housing Board flats and condo units in the second quarter even as prices have reached record highs.

Experts said this marks a reversal in the resale market that had seen a downward trend in transaction volume in previous quarters.

They added that reasons ranged from pent-up demand, to lower cash premiums asked by sellers of HDB flats.

On the private-property front, the 3,487 resale transactions in the second quarter, up from 2,206 in the first, represented a rise of close to 60per cent.

HDB resale deals rose 19 per cent to 7,011 from 5,892.

ERA Realty key executive officer Eugene Lim noted that buyers who are not going for expensive, new, top-end condo units in the suburban areas are instead turning to the core central area and 'finding good bargains'.

Citing an example, he said an 800sqft apartment at the 99-year-leasehold Watertown in Punggol recently sold for $1.1 million. By comparison, a similar-sized apartment at the freehold Levelz in Farrer Road went for about $1.2 million.

There were 701 transactions in the city centre in the second quarter, compared to 376 in the first.

Private non-landed home prices in the city centre and city fringe inched up 0.6 per cent and 0.4 per cent respectively, reversing a dip of 0.6 per cent in both segments in the previous quarter.

In suburban areas, it rose 0.5 per cent, down from a 1.1 per cent gain.

Overall, private homes increased by 0.4 per cent, compared to a decrease of 0.1 per cent in the previous quarter.

COVs are cash premiums paid above a flat's valuation. Based on data from various agencies, the estimated overall COV median is $26,000 so far this year, compared to about $34,000 in the fourth quarter of last year.

Mr Lim said those opting to buy resale flats also do not need to wait three years for new flats to be built. 'And if they are second-timers, it might be more worth their while to pay the COV than the resale levy,' he added.

The resale levy that a buyer going for his second subsidised flat must pay ranges from $15,000 to $50,000.

Despite the flurry of resale activity, experts are predicting that growth will be gradual for both the HDB and private segments, in part due to the big supply of new homes in the pipeline.

Source: The Straits Times – 28 July 2012

Landed properties still in hot demand

Landed home prices moved up a notch in the second quarter as demand for the pricey properties stayed buoyant.

Values increased 0.4 per cent from the previous three months, according to the Urban Redevelopment Authority (URA) index out yesterday.

Terraced homes showed the largest increase at 1.2 per cent, followed by semi-detached at 0.6 per cent, while detached homes declined by 0.4 per cent.

Property consultants noted that landed home prices have outperformed those of private flats since the third quarter of 2010.

Over the last seven years, prices of such homes have doubled. They are perceived as better investment given the limited supply of landed properties in land-scarce Singapore with a growing population, rising affluence of local families and influx of new wealthy citizens.

One example of the robust sector can be found at Haus@Serangoon Garden where buyers have snapped up 39 out of 50 landed houses released in just two weeks.

The two-storey homes - with an attic and basement - developed by City Developments and Hong Realty do not come cheap. A 1,615 sq ft intermediate terraced unit goes for at least $2.4 million while at least $2.8 million is needed for a 2,284 sq ft corner home.

Terraced homes in the west - favoured for its lower absolute prices - have risen 97 per cent in the past three years while those in the east and north-east were up 89 per cent

Consultants said demand for landed properties is expected to stay resilient given the limited pool of freehold landed properties find their share of the total housing stock shrink over time. Relatively quick capital gains will make it a superior hedge against inflation too.

But well-heeled buyers may look to non-landed homes in prime locations for their better rental yields and demand.

Source: The Straits Times – 28 July 2012

Developers lowering launch prices: URA data

Developers appear to be lowering the prices of their launches, with fresh figures showing prices for uncompleted homes falling slightly in the second quarter.

Data from the Urban Redevelopment Authority showed that prices of uncompleted non-landed homes dipped 0.9 per cent in the three months to June - the first fall since mid-2009.

Prices for completed private homes, however, climbed 2.3 per cent.

Experts say the fall could be explained by the fact that some launches in the period were in less desirable locations, including those further from MRT stations and amenities, thus fetching lower prices.

Another factor they cited is that some of the new launches were in estates such as Punggol and Pasir Ris, where many projects had already been pushed out. This led to stiff competition and more conservative pricing.

Prices for homes in the city centre have fallen 0.6 per cent. This is at a steeper rate than the 0.2 per cent slide in the first quarter.

This could be tell-tale signs of deepening fault lines in the high-end market, where some developers might be beginning to succumb to the pressure of persistent weak demand by reducing price in order to move sales.

Experts add that mass market home buyers are price sensitive, and projects priced less than $1,000 per sq ft (psf) have been seeing higher take-up rates.

Source: The Straits Times – 28 July 2012