After red-hot December, property braces for chill

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Published January 18, 2011

After red-hot December, property braces for chill

Private home sales sizzled before cooling measures; 2011 expected to be a more sobering story

By KALPANA RASHIWALA


(SINGAPORE) December may have been chilly in the rest of the world, but for Singapore's property market, it was simply sizzling. The latest numbers underscore the backdrop against which authorities introduced last week's cooling measures.

Developers sold 1,332 private homes (excluding executive condos) in the traditionally slow month, exceeding the combined figure for the three preceding Decembers. This took the total for 2010 to a fresh high.

But property consultants expect the numbers to drop dramatically this year from the 16,364 private homes that developers sold in 2010 - in the face of the latest cooling measures.

Forecasts for developers' private home sales this year range from 8,000 to 12,000 units. Prices too are expected to drop with one consultant pegging the dip at 5 per cent for the mass market in the first quarter.

Speculators may now turn their attention to shoebox industrial units and strata offices and shops as non-residential property has been spared under the latest cooling package, observers say.

The 2010 sales number was 11.4 per cent above 2009's 14,688 units and surpassed the previous high of 14,811 units set in 2007, according to figures released yesterday by the Urban Redevelopment Authority.

The secondary market has also been buoyant.

Knight Frank's analysis of URA Realis caveats data shows a 23 per cent increase in the number of private homes (excluding ECs and en bloc sale units) sold in the resale market last year to 18,468 units. In addition, 3,264 caveats were lodged for private homes traded in the subsale market in 2010, close to the 3,838 units in 2009.

The 2010 resale and subsale figures are expected to increase as more caveats are lodged in the coming weeks. Resales refer to secondary market deals in projects which have received Certificate of Statutory Completion while subsales involve secondary market transactions in projects that have yet to receive CSC.

DTZ's South-east Asia research head, Chua Chor Hoon, forecasts that this year, developers may sell about 8,000-10,000 private homes. Knight Frank's number is 10,000-12,000 units.

Ms Chua reckons that prices would decline this year but not in the first quarter, when transactions are likely to thin amid a standoff between buyers and sellers. 'When sellers see demand is not coming back, those who need to sell will have to be more open to negotiation. I think prices in the mass and mid-market segments are likely to fall more as the lower loan-to-value (LTV) limits will hit those on a tighter budget.'

Knight Frank consultancy and research head Png Poh Soon foresees an up to 5 per cent price decline in Q1 for the mass-market segment while prices remain flat in the mid and luxury markets. 'Developers of mass-market projects, which are typically bigger, may be more inclined to price their projects attractively to draw buyers.'

Mr Png also reckons that sales of shoebox apartments would plunge as these have drawn many speculators, who are expected to be affected by the stiffer penalties for short-term trading now.

The government last week hiked the seller's stamp duty rate to as high as 16 per cent for private homes sold within the first year. The LTV limit for new home purchases by individuals servicing one or more existing housing loans has been lowered from 70 per cent to 60 per cent.

Ms Chua said that strong primary market sales for two consecutive years reflect 'a lot of speculative and investment demand'. 'Now, with the clampdown on the residential sector, a lot of investors will look at other property sectors as well as overseas properties.'

Savills Singapore senior manager Christine Sun said: 'Small investors may switch from buying 'mickey mouse' apartments to small strata industrial and office units, or HDB shophouses which still command attractive yields without bearing the brunt of the property measures.'

URA's figure of 1,332 private homes sold by developers in December was 30.4 per cent lower than November's 1,915 units but significantly above sales of 481 units in December 2009, 131 units in December 2008 and 305 units in December 2007.

Including ECs, the trend was similar, with the sales tally at 1,699 units for December 2010, more than the 940-unit total for the preceding three Decembers.

Including ECs, developers sold 17,438 private homes last year, up from 14,688 units in 2009 and also surpassing the 2007 figure of 14,967 units.

The Outside Central Region (OCR), where mass-market projects are located, made up 45 per cent of private homes (excluding ECs) sold by developers in December. The number of units they sold in Core Central Region (CCR), which includes the prime districts, CBD and Sentosa Cove, doubled from 218 in November to 449 in December.

'Reflecting the pick-up in investor confidence in CCR, where the price rise has lagged, 75 non-landed homes were transacted at above $3,000 psf in December, up significantly from 11 units in November and the most deals in this price-band since the 103 units sold in December 2007,' said Colliers director Tay Huey Ying

December's priciest deal was $4,307 per square foot, for a unit at The Ritz-Carlton Residences Singapore Cairnhill, followed by Nassim Park Residences ($3,833 psf) and Tomlinson Heights ($3,643 psf). Last month's best selling project was Prive, an EC in Punggol (326 units), followed by The Tennery in Choa Chu Kang (220 units), D'Leedon at Farrer Road (180 units) and Robinson Suites (157 units).

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Jan 18, 2011

December home sales lower but still strong

By Esther Teo


SALES of new private homes last month fell some 30 per cent from the previous month, but still remained buoyant.

The attractions of low interest rates, ample liquidity and strong economic growth continued to entice buyers as they have all year, leading to sales of 1,332 new private units last month, data from the Urban Redevelopment Authority shows.

This is about a third lower than November's tally of 1,915 units.

December's sales helped propel total sales for the year to a record 16,364 - and likely played a part in last week's surprise cooling measures in the process.

That unprecedented annual number - where suburban homes dominated in sales activity - is well ahead of the old benchmark of 14,811 set in 2007. Factor in executive condo sales from last year and the number is an even more striking 17,438 units.

Last month's figure was strong given that December is traditionally a slow month, when people think more about the festivities than buying a home.

Compare that bumper number with December 2009, when only 481 units were sold. In fact, the average December sales figure from 2007 to 2009 is only 313 units.

Experts put the sales boom down to buyers deciding to enter the market again after a wait-and-see period following the August cooling measures.

That points to another period of declining sales now, given the stringent measures imposed last week: Seller's stamp duty could be as much as 16 per cent on some sales, while buyers with existing mortgages will have to stump up more cash upfront on a second home.

Experts say the continued strength of sales last month was probably a factor in last week's measures.

'We normally see a dip in the number of transactions at the year end,' said PropNex chief executive Mohamed Ismail. 'And it is probably this surprisingly hot (fourth quarter) that has prompted the Government to announce further cooling measures.'

Mr Ismail expects about 1,000 units to be sold this month and 'much less' in February and March, as buyers with a short-term view are dissuaded from taking the plunge.

Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said the main impact of the new measures would be psychological, dampening buying sentiment as many people were caught by surprise.

'We might see about 500 units sold this month as sales fall in a knee-jerk fashion, although the numbers might pick up again in a few months... I think we are underestimating the liquidity problem,' he added.

Experts also say that major price gains will be curtailed for now as buyers adjust to the tougher-than-expected new rules.

Mr Png Poh Soon, head of research and consultancy at Knight Frank, expects sales numbers this quarter to shrink and prices to ease after sharp increases last year.

'Buyers' and sellers' sentiments are likely to be affected by the latest set of measures, causing prices to fall, in particular the mass market segment...(which is) likely to fall by up to 5 per cent quarter-on-quarter.'

However, he does not expect the overall market to correct drastically, with the high-end segment to be the least affected, with prices likely flat or increasing by less than 3 per cent this quarter.

Last month's numbers also gave early signs of a pick-up in investor confidence in homes in the city centre, where price gains have lagged behind the city fringe and suburban areas.

Colliers International director of research and advisory Tay Huey Ying said 75 private apartments were transacted at above the $3,000 per sq ft level last month, many of them in the city centre. There were only 11 such units sold in November.

That is the highest number of deals closing above $3,000 psf since December 2007, she added.

Top-selling projects last month include The Tennery, which sold 220 units at a median price of $1,118 psf; d'Leedon, which found buyers for 180 apartments at a median of $1,540 psf; and Robinson Suites, where 157 units moved at a median of $2,941 psf.

If executive condos are included, Prive at Punggol Road was the top-selling project, with 326 units sold at a median price of $704 psf.

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