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10-04-15, 23:59
www.businesstimes.com.sg/real-estate/uneven-price-falls-for-condo-projects-ura

Uneven price falls for condo projects: URA

Only two projects in Core Central Region saw price falls of over 20 per cent from 2013 peak

By Lynette Khoo

[email protected]@LynetteKhooBT

3 Apr


AN islandwide study by the Urban Redevelopment Authority (URA) on private non-landed home prices showed that 10 out of 46 projects saw double-digit declines in median prices from their 2013 peak. Of these, only two projects in the city centre marked declines of slightly over 20 per cent.

The wide dispersions of price falls across eight projects in the Core Central Region (CCR), from as low as 0.7 per cent in RV Residences to as high as 21.9 per cent in Helios Residences, translated into the CCR's median price fall of 8.9 per cent, the URA study shows.

These findings seem to support the argument that large price falls are confined to a few projects. Earlier on, some industry players have pointed out that luxury home prices have fallen 20 per cent last year from the 2013 peak.

Various consultancies have also, from time to time, published their own price estimates of specific baskets.

Knight Frank's study of ultra-luxury condos showed a 12.4 per cent fall in average prices over last year; DTZ found a 9.7 per cent drop in the median price over last year for luxury condos completed for at least a year and an 11.5 per cent fall from the peak in Q3 2013 for that segment.

URA said its study compared median prices between two periods - H2 2013 and six months to end-Q1 2015; Q3 2013 was a peak for URA's private residential property price index (PPI).

The study covers projects with at least four transactions in each of the two periods and where the difference in the median size of units transacted did not exceed 10 sq m across the two periods. The sales data was derived from caveats lodged and developers' sales survey.

"With weak market activity and influx of completed units for the past year, the general trend of lower private home prices has been more acute for projects that had higher price levels," said Alice Tan, head of research and consultancy at Knight Frank.

"Moreover, with stiff competition among developers and owners to offload their units, projects that have seen low sale activity would have seen higher downward price pressures," she added. But projects with attractive location and product attributes tend to be more resilient in a weak market.

In URA's study, 18 city-fringe projects in the Rest of Central Region (RCR) fell by 5.3 per cent across the two periods (H2 2013 versus Q4 2014-Q1 2015), led by Pebble Bay at Tanjong Rhu that saw a 14.4 per cent slump in median price for resales.

Twenty suburban projects in the Outside Central Region (OCR) saw a 6 per cent fall in median prices over the same period, with the biggest fall of 17.1 per cent seen in the new sales for eCO condo in Bedok.

DTZ head of research Lee Nai Jia finds that projects in the CCR with the biggest fall in median prices have relatively higher median prices than the rest and are located in very prime locations.

"Some sellers are trying to capitalise on the low price environment and have to unlock the equity in these houses," he said.

In the OCR, projects that tend to attract buyers of higher income threshold appeared to be more resilient, according to Mr Lee, citing a 14.8 per cent fall in median resale prices for Grandeur 8 versus a 4.5 per cent median resale price increase in Costa Del Sol in the URA study.

The majority of buyers for Grandeur 8 were HDB upgraders, as opposed to private addressees for Costa Del Sol, Mr Lee said.

SLP International executive director Nicholas Mak noted that the median prices of most projects in all three regions dropped by one to 9.9 per cent.

"As expected, the median prices of new sales would hold up better than resale prices because the developers have much more resources and experience to market their projects to achieve prices that are higher than that of resale properties," he said.

"The individual seller will always be out-gunned and out-matched by developers and their agents."

But due to thin transaction volumes, the median or average prices are more susceptible to changes - possibly holding up in one quarter but suffering a drop a few quarters later, Mr Mak said.