According to DTZ, resale prices of private homes were mostly unchanged in Q3 2013 despite a lower transaction volume, as the Total Debt Servicing Ratio (TDSR) measures worked their way through the market.
The TDSR framework has led to a longer loan application process with more compliance checks by banks and has also affected transaction volumes as multiple-property owners who still want to purchase or invest in residential properties find it more difficult now to obtain a loan for their purchases.
Primary sales of private homes (excluding executive condominiums) have fallen from 4,538 units in Q2 to 1,224 units in July-August. Even though transactions are expected to pick up in September with reportedly healthy take-up for projects launched in September, transactions in Q3 will not exceed that in Q2. Meanwhile, in the secondary market, transaction volumes continued to remain thin. 1,227 units were sold in the secondary market in Q3, falling sharply from 2,405 units sold in Q2 2013 and 4,358 units sold in Q3 2012.
Based on a basket of existing properties tracked by DTZ Research, resale prices across all non-landed private residential segments remained unchanged quarter-on-quarter (q-o-q) in Q3, despite the fall in transaction volume. In the prime districts of 9, 10 and 11, resale prices of freehold condominiums were flat after registering a 1.0% growth in H1 while resale prices of luxury condominiums remained flat for the fifth consecutive quarter. In the suburban areas, after registering a 2.2% growth in H1, resale prices of leasehold condominiums were also unchanged in Q3.
Although the landed segment had held up better than the non-landed segment in previous quarters, resale price growth of landed homes also slowed down in Q3.
Resale prices of landed homes in most segments registered flat growth q-o-q in the quarter with the exception of non-prime freehold and leasehold terrace homes, which saw prices increase by a marginal 1.5% and 1.0% q-o-q respectively in Q3, due to their comparatively more affordable overall quantum. This increase was, however, a moderation compared to the growth of 5.6% and 5.1% in the resale prices of non-prime freehold and leasehold terrace homes respectively in H1.
Margaret Thean, DTZ’s Executive Director, Residential, said: “As the TDSR measures limit the amount of loans buyers can take, they are now more selective in their purchases even as they have more choices. Demand will therefore gravitate towards developments that offer buyers better value such as those that are competitively priced or projects that are well-located with easy access to amenities.”
Lee Lay Keng, DTZ’s Head of Singapore Research, commented: “Looking ahead, resale transaction volume is likely to remain weak as the TDSR measures and the earlier cooling measures continue to work their way through the market. There is limited incentive for individual sellers to sell their properties unless they receive a premium as their replacement cost is now higher. In the absence of any major economic shocks, they are also unlikely to sell their properties in distress. Nonetheless, some downside pressure on resale prices could be expected going forward, against the backdrop of a strong pipeline supply and lower launch prices of new projects.”
In the primary market, sale volume will fall from last year’s record level of around 22,000 units but could still come in close to 15,000-16,000 units, similar to the levels seen in 2010-2011.
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Originally Posted by Ringo33
