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.
Source: Business Times