reporter2
21-04-12, 03:48
http://www.straitstimes.com/Money/Story/STIStory_788280.html
HIGH-END PROPERTY MARKET
Few buyers for new units, data shows
But resale market more active, as lower prices entice more investors
Published on Apr 13, 2012
By Esther Teo, Property Reporter
NEW high-end homes are proving hard to shift, but the resale market is in far better shape, according to data from consultancy Jones Lang LaSalle (JLL).
There were 192 non-landed resale caveats lodged in the first quarter, yet developers managed to sell only 30 new units, said Dr Chua Yang Liang, JLL's head of research for South-east Asia.
This ratio is the most lopsided in at least eight years.
The high-end segment refers to transactions in the prime districts of 9, 10 and11.
JLL's analysis of caveats lodged with the Urban Redevelopment Authority also shows that total transactions in general have been falling for the past three quarters, due to general market uncertainty and cooling measures.
Some experts said the sales gap is high simply because there have been few launches of new high-end projects.
DTZ Asia-Pacific research head Chua Chor Hoon also noted that there is a larger stock of secondary units for sale, so transactions will be higher as well.
Buyers picked up new units at The Scotts Tower and d'Leedon in the first quarter, while resale deals were inked at Spring Grove and Orchard Scotts.
Lower prices in the high-end resale market could be enticing more investors into that segment instead, experts added.
The Singapore Residential Price Index compiled by the National University of Singapore shows that resale home prices in central areas dipped 0.9 per cent in February, on top of the 2.4 per cent slide in January.
JLL's Dr Chua said the weaker resale prices for prime homes had narrowed the gap between the mass-market and high-end segment to 63 per cent.
This means that the median price of prime homes sold in the quarter was 63 per cent more than the median price of mass-market homes transacted.
This gap is now back to levels seen before the high-end market boom in 2007. The price difference then skyrocketed to 158 per cent in the fourth quarter of 2007.
'Some marginal investors or buyers will find the high-end segment offering more value and potential upside than mass-market in the longer term,' Dr Chua added.
The resale segment could also be picking up more because foreigners are buying homes for immediate occupation rather than waiting two to three years for a new one to be built, said experts.
Mr Colin Tan, research head at Chesterton Suntec International, said high-end resale prices are likely to continue weakening in the short-term. This is because many homes were launched when the deferred payment scheme (DPS) was still being offered. This allowed the buyer to make a down payment of 20 per cent of the purchase price and then defer repayments until the apartment was completed.
'As DPS provides protection until completion, prices are sticky downwards when the majority of properties are 'protected'. But as more projects get completed, protection is lifted, and some resales are necessary for investors who do not wish to hold on to their units to rent,' he said.
'But because rentals are still decent enough to cover very low borrowings costs, the incentive to sell is still not very strong and some may hold it vacant for some time.'
Still, the greater supply as more high-end condos get built will lead to increased competition and gradually declining prices, Mr Tan added, noting that the price decline will stabilise once most completed properties entering the market are no longer on the DPS.
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HIGH-END PROPERTY MARKET
Few buyers for new units, data shows
But resale market more active, as lower prices entice more investors
Published on Apr 13, 2012
By Esther Teo, Property Reporter
NEW high-end homes are proving hard to shift, but the resale market is in far better shape, according to data from consultancy Jones Lang LaSalle (JLL).
There were 192 non-landed resale caveats lodged in the first quarter, yet developers managed to sell only 30 new units, said Dr Chua Yang Liang, JLL's head of research for South-east Asia.
This ratio is the most lopsided in at least eight years.
The high-end segment refers to transactions in the prime districts of 9, 10 and11.
JLL's analysis of caveats lodged with the Urban Redevelopment Authority also shows that total transactions in general have been falling for the past three quarters, due to general market uncertainty and cooling measures.
Some experts said the sales gap is high simply because there have been few launches of new high-end projects.
DTZ Asia-Pacific research head Chua Chor Hoon also noted that there is a larger stock of secondary units for sale, so transactions will be higher as well.
Buyers picked up new units at The Scotts Tower and d'Leedon in the first quarter, while resale deals were inked at Spring Grove and Orchard Scotts.
Lower prices in the high-end resale market could be enticing more investors into that segment instead, experts added.
The Singapore Residential Price Index compiled by the National University of Singapore shows that resale home prices in central areas dipped 0.9 per cent in February, on top of the 2.4 per cent slide in January.
JLL's Dr Chua said the weaker resale prices for prime homes had narrowed the gap between the mass-market and high-end segment to 63 per cent.
This means that the median price of prime homes sold in the quarter was 63 per cent more than the median price of mass-market homes transacted.
This gap is now back to levels seen before the high-end market boom in 2007. The price difference then skyrocketed to 158 per cent in the fourth quarter of 2007.
'Some marginal investors or buyers will find the high-end segment offering more value and potential upside than mass-market in the longer term,' Dr Chua added.
The resale segment could also be picking up more because foreigners are buying homes for immediate occupation rather than waiting two to three years for a new one to be built, said experts.
Mr Colin Tan, research head at Chesterton Suntec International, said high-end resale prices are likely to continue weakening in the short-term. This is because many homes were launched when the deferred payment scheme (DPS) was still being offered. This allowed the buyer to make a down payment of 20 per cent of the purchase price and then defer repayments until the apartment was completed.
'As DPS provides protection until completion, prices are sticky downwards when the majority of properties are 'protected'. But as more projects get completed, protection is lifted, and some resales are necessary for investors who do not wish to hold on to their units to rent,' he said.
'But because rentals are still decent enough to cover very low borrowings costs, the incentive to sell is still not very strong and some may hold it vacant for some time.'
Still, the greater supply as more high-end condos get built will lead to increased competition and gradually declining prices, Mr Tan added, noting that the price decline will stabilise once most completed properties entering the market are no longer on the DPS.
[email protected]