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03-07-14, 12:29
http://www.straitstimes.com/archive/thursday/premium/money/story/private-home-prices-may-fall-20-20140626
Private home prices 'may fall up to 20%'
But don't expect a crash, say analysts
Published on Jun 26, 2014 1:05 AM
By Melissa Tan
PRIVATE home prices are expected to keep falling this year but analysts say a crash is unlikely.
OCBC Investment Research forecast yesterday that values could dip 10 to 20 per cent from the start of this year to the end of next year.
It warned that mass-market homes could take a bigger hit than the middle and high-end segments but added that the price slide would probably not exceed 20 per cent despite possible oversupply and an expected interest rate increase.
Likewise, Maybank Kim Eng said earlier this month that it expects a price drop of 10 to 15 per cent from now until the end of next year.
Both research houses estimate that around 10,000 new private homes will be sold this year.
The OCBC analysts, led by Mr Eli Lee, said private home prices are likely to escape a crash due to solid underlying demand, which arose largely on the back of a prolonged period of undersupply of homes from 2004 to 2012.
"We see significantly more buyers coming into the market at lower price points, which will likely slow the rate of decline as prices soften."
This latent demand is reflected in firm sales figures at projects that have been priced attractively or have dangled discounts, they noted. For instance, competitive prices helped projects such as Coco Palms in Pasir Ris rake in stronger sales than other new launches last month.
The 944-unit condominium moved 590 units last month at a median price of $1,018 per sq ft (psf), according to Urban Redevelopment Authority data.
This was lower than the median resale price of $1,156 psf over the first five months this year at an older completed condominium just next door, NV Residences, according to caveats at the URA.
The OCBC analysts also noted that while developers are likely to ease prices to shift units, "we do not foresee a fire-sale situation... because of the strong balance sheets for large developers".
There are around 36,000 unsold new homes in the pipeline, lower than the historical 10-year average of 41,000 units, they noted.
They expect new sales of private homes to fall to 10,000 units this year.
This would be 33 per cent lower than the 15,015 sold last year, which was in turn 32.4 per cent down on the 22,197 moved in 2012.
Maybank Kim Eng analyst Wilson Liew also said in a note earlier this month that he had slashed his forecast for new home sales this year from 13,000 to 14,000 units to 9,000 to 10,000 units.
Mr Liew said some upcoming launches may see "uninspiring" sales due to their relatively higher prices.
He said that new projects such as the 1,042-unit Marina One in Marina Bay, the 500-unit Highline Residences in Tiong Bahru and the 469-unit The Crest in Prince Charles Crescent are likely to go on sale at prices above $1,500 psf, given their locations.
"Sell-through rates may be lower than that of more affordably priced projects in the suburbs."
Official flash estimates for private home prices in the second quarter of this year are
expected to be released next Tuesday.
[email protected]
Private home prices 'may fall up to 20%'
But don't expect a crash, say analysts
Published on Jun 26, 2014 1:05 AM
By Melissa Tan
PRIVATE home prices are expected to keep falling this year but analysts say a crash is unlikely.
OCBC Investment Research forecast yesterday that values could dip 10 to 20 per cent from the start of this year to the end of next year.
It warned that mass-market homes could take a bigger hit than the middle and high-end segments but added that the price slide would probably not exceed 20 per cent despite possible oversupply and an expected interest rate increase.
Likewise, Maybank Kim Eng said earlier this month that it expects a price drop of 10 to 15 per cent from now until the end of next year.
Both research houses estimate that around 10,000 new private homes will be sold this year.
The OCBC analysts, led by Mr Eli Lee, said private home prices are likely to escape a crash due to solid underlying demand, which arose largely on the back of a prolonged period of undersupply of homes from 2004 to 2012.
"We see significantly more buyers coming into the market at lower price points, which will likely slow the rate of decline as prices soften."
This latent demand is reflected in firm sales figures at projects that have been priced attractively or have dangled discounts, they noted. For instance, competitive prices helped projects such as Coco Palms in Pasir Ris rake in stronger sales than other new launches last month.
The 944-unit condominium moved 590 units last month at a median price of $1,018 per sq ft (psf), according to Urban Redevelopment Authority data.
This was lower than the median resale price of $1,156 psf over the first five months this year at an older completed condominium just next door, NV Residences, according to caveats at the URA.
The OCBC analysts also noted that while developers are likely to ease prices to shift units, "we do not foresee a fire-sale situation... because of the strong balance sheets for large developers".
There are around 36,000 unsold new homes in the pipeline, lower than the historical 10-year average of 41,000 units, they noted.
They expect new sales of private homes to fall to 10,000 units this year.
This would be 33 per cent lower than the 15,015 sold last year, which was in turn 32.4 per cent down on the 22,197 moved in 2012.
Maybank Kim Eng analyst Wilson Liew also said in a note earlier this month that he had slashed his forecast for new home sales this year from 13,000 to 14,000 units to 9,000 to 10,000 units.
Mr Liew said some upcoming launches may see "uninspiring" sales due to their relatively higher prices.
He said that new projects such as the 1,042-unit Marina One in Marina Bay, the 500-unit Highline Residences in Tiong Bahru and the 469-unit The Crest in Prince Charles Crescent are likely to go on sale at prices above $1,500 psf, given their locations.
"Sell-through rates may be lower than that of more affordably priced projects in the suburbs."
Official flash estimates for private home prices in the second quarter of this year are
expected to be released next Tuesday.
[email protected]