http://www.businesstimes.com.sg/spec...march-20140410

Published April 10, 2014

Resale condos mark higher prices, volumes in March

But observers say it is too early to cheer as resale market remains soft

By Lynette Khoo [email protected]


RESALE prices of non-landed private homes inched up 0.2 per cent in March, led by an increase in transaction prices in the Rest of Central Region (RCR).

This marked a slight recovery from a 3.1 per cent decline in resale prices in February, flash estimates by the Singapore Real Estate Exchange (SRX) show.

Resale transactions increased significantly in March with 451 transactions registered - the highest resale volume since October. This is 82.6 per cent higher than a month ago but 22.5 per cent lower than in March last year.

Market watchers note that the improved numbers suggest pent-up demand in March after the festive months of January and February. But they say it is too early to cheer as the latest data merely reflects a stabilising market since the cooling measures late last year.

The month-on-month increase in resale prices in March "mustn't be read as significantly improved buyers' sentiments for resale homes, and neither can it be construed as possible turnaround in price performance and confirm price recovery for resale homes in 2014", said Ong Kah Seng, director at R'ST Research. There is still an "overall cautiousness lingering", he added.

Resale prices in Core Central Region (CCR) and the RCR improved during March, climbing 0.3 per cent and 1.3 per cent respectively. But resale prices in Outside Central Region (OCR) continued to soften last month with a 0.1 per cent decline.

ERA Realty key executive officer Eugene Lim noted that OCR is most affected by new supply from more projects obtaining the temporary occupation permit (TOP). "In addition, the slew of cooling measures collectively affects the typical purchaser of suburban properties as they may not be as financially mobile as higher-end purchasers."

Rental prices also came down last month even though rental volumes increased. An estimated 3,087 units were rented in March, 27.8 per cent more than in February, but rental prices came down by 0.9 per cent month on month.

While rental price declines were observed islandwide, they were most pronounced in the RCR, where rental prices fell 1.4 per cent month on month.

Leasing competition is expected to heat up as newly completed private homes are put up for rent, property consultants say. More than 17,000 private residential units are expected to be completed this year, which will be the highest number since the Urban Redevelopment Authority started keeping these records in 1996. This will also be 75 per cent higher than the long-term average in the last 18 years.

Mr Lim noted that there was still demand for rental but landlords have to be more realistic to compete for tenants. "It is now a tenant's market and location is all the more important. Those properties that are near MRT are highly preferred due to convenience," he said. "In addition, new apartments are preferred compared to older ones."

SRX's new forward looking indicator - TOX or median transaction over X-value - ended at a negative $13,112 in March after fluctuating in the negative territory. This suggests that median transacted price was lower than the X-value, which is the estimated value of the unit based on past transacted prices.

There may be subsequent months where resale transactions include newly completed units that are smaller and have higher per-square-foot pricing.

Resales of such units may cause an "ad hoc" increase in the median resale prices, which is not sustainable, Mr Ong said.