Resale home prices dip for 3rd month | 2011 subsales down

Straits Times: Thu, Mar 29

PRICES of private resale homes have fallen for the third month in a row with high-end and small flats recording the highest value drops. Overall prices fell by 0.8 per cent last month, compared with January, and added to the 1 per cent dip in that month from December. Prices of central homes fell by 0.9 per cent while those for non-central property declined 0.6 per cent following a 0.3 per cent pick-up in January. Prices of shoebox apartments, which are around 500 sq ft or less, dipped by 0.9 per cent last month, according to the Singapore Residential Price Index compiled by the National University of Singapore's Institute of Real Estate Studies. The monthly index measures a basket of completed private apartments and condominiums but excludes executive condos. Property experts were not surprised at the fall in prices, given the weakened interest in the secondary market in recent months. Mr Ong Kah Seng, director R'ST Research, said: 'The weakened leasing market is also a major deterrence for home seekers, especially investors whose main property-buying objective is to enjoy the benefits of a significant and encouraging immediate income stream.' The weaker leasing market is partly due to companies cutting expatriates' housing allowances, he added. 'The variety of new launches have also drawn attention away from the secondary market,' said Mr Nicholas Mak, head of research and consultancy at SLP International Property Consultancy. He pointed out that buying new units may be easier on home owners' pockets as they will have the option of a progressive payment scheme, unlike resale properties which require an immediate payment upfront. Mr Mak also attributed the dampened demand to recent property cooling measures. Experts said prices are likely to continue falling in the coming months, although Mr Ong expects interest in resale properties to improve by the second half of the year, if there is 'appropriate re-pricing', which happens if demand keeps contracting. For now, Mr Mak said it could gradually become a 'buyer's market'. 'With the current situation, they can look to drive a hard bargain,' he said. Credo Real Estate executive director Ong Teck Hui added that it remains to be seen if prices will fall more such that buyers realise there are better deals in the secondary market instead of the primary one. Source: The Straits Times  0.5% of 2011 subsales bought in same yr Business Times: Thu, Mar 29 THE stiff seller's stamp duty (SSD) rates unveiled in January last year have been effective in snuffing out speculation in private residential properties, a caveats analysis by Savills Singapore prepared for BT earlier this week shows. Just 0.5 per cent of 2011's subsales of private apartments and condos involved units that had been bought in the same year - down from 3.8 per cent in 2010 and 11.7 per cent in 2009. Those who buy a private home on or after Jan 14, 2011, and sell it within a year have to pay a 16 per cent SSD on the sale price. The SSD rates are lower at 12, 8 and 4 per cent if the properties are sold in the respective second, third and fourth year of purchase. Savills Singapore research head Alan Cheong said that besides the stiff penalty under the SSD deterring short-term trading, a slower pace of price appreciation for non-landed private homes last year also contributed to the slowdown in subsales in 2011 involving properties bought in the same year. For example, the Urban Redevelopment Authority's (URA) non-landed private home price index appreciated 2.85 per cent between Q1 and Q4 last year, or the lowest and highest points in 2011. 'This rate of price appreciation was not enough to offset the 16 per cent SSD,' said Mr Cheong. Savills examined URA Realis caveats data for subsale deals and tried to find previous caveat records for the same units; where it found matches, it worked out the holding period for the subsales and the profit or loss. The latter was calculated as the difference between sale and purchase prices, and took into account the SSD but not the standard buyer's stamp duty, agent fees and other expenses. Eleven of the 2,337 subsale matches Savills traced for 2011 involved units that had been flipped in the same year. The majority - six units - incurred a loss. In the preceding three years, the majority of subsale units which had been flipped in the same year were profitable, due mainly to the high rate of capital appreciation and/or the absence of punitive SSD rates, said Mr Cheong. He added that subsales in 2010 could also have been affected by the earlier two sets of SSD rates announced in that year. Under the first announcement, those who acquired a private home on or after Feb 20, 2010, and sold it within a year paid the following SSD rate, which is the same as the standard buyer's stamp duty: one per cent for the first $180,000 of the consideration, 2 per cent for the next $180,000 and 3 per cent for the balance. In August 2010, the holding period for the SSD was extended from one to three years. For residential properties bought on or after Aug 30, 2010, and sold within a year, the full SSD rate was imposed - one per cent for the first $180,000 of the selling price, 2 per cent on the next $180,000 and 3 per cent on the rest. If the property is sold in the second year, two-thirds of the full-rate SSD has to be paid. This falls to one-third of the full-rate SSD for properties sold in the third year. In addition, price growth had slowed in 2010, reducing the incentive to flip a property that had been picked up in the same year. URA's index climbed 8.6 per cent between the lowest and highest points of 2010, that is, Q1 and Q4. This was a less spectacular rise compared with the 24.3 per cent gain between Q2 and Q4 of 2009. 'In that year (2009), there was an inflection point with property prices bottoming out in the first half after the global financial crisis and posting a sharp rise in the second half, creating an opportunity for those who had bought earlier that year to take a profit,' noted Mr Cheong. Indeed, Savills' analysis showed that 212 units or 64.4 per cent of the total 329 which were flipped in 2009 had been acquired in the first half and disposed of in the second half. Reflecting the role of major economic events on the fortunes of the local property market, in 2008, just 38 or 2.6 per cent of the total 1,463 subsales involved units that had changed hands in the same year. The year 2008 ended with URA's non-landed home price index slipping 8.7 per cent from its peak in Q2. For most players, prices did not appreciate during that year to a level that would create a profit from flipping within a span of months. Furthermore, home buying demand generally dried very quickly when Lehman Brothers collapsed, recalls Mr Cheong. Source: Business Times