Dip in resale prices of private homes

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Dip in resale prices of private homes

SRPI figures show 0.7% drop in September, with more falls expected

Published on Oct 29, 2014 1:17 AM

By Cheryl Ong


RESALE prices of private homes dipped last month, dashing hopes that there would be a buyer rebound from the Hungry Ghost month when sales went on hold.

Apartment prices fell 0.7 per cent overall in September from August, according to the Singapore Residential Price Index (SRPI) yesterday. That decline reversed the revised 0.2 per cent increase in August over July and points to further falls ahead.

The index compiled by the National University of Singapore tracks a basket of completed homes across the island.

September's reversal confirms analyst forecasts last Friday that home prices have yet to bottom out in the wake of tough mortgage caps and levies on foreign buyers.

They point to an impasse between buyers and sellers as home owners have holding power and are in no hurry to sell. This is likely to result in further declines in prices every month as fewer homes will be sold.

"What causes prices to go up is volume," said Mr Eugene Lim, key executive officer at ERA Realty.

"The SRPI is based on resale transactions, which have been low, and it's generally negative because there are still mismatched expectations between sellers and buyers. In the first place, there are not a lot of transactions in the whole market."

Just 1,288 units changed hands on the resale market in the three months to Sept 30, accounting for 43.6 per cent of all transactions, according to the Urban Redevelopment Authority last Friday. In the same period last year, 1,392 resale units were sold.

The steady decline in activity can be seen in stark terms when considering that there were 3,459 resale transactions in the fourth quarter of 2012, just before the tough cooling measures were imposed in January last year.

Shoebox units - apartments of up to 506 sq ft - were the only winners in September with a price gain of 0.4 per cent following a slip of 0.1 per cent in August.

The mortgage cap, which limits a borrower's monthly debt to 60 per cent of gross monthly income, has put larger units out of reach for many buyers - hence the switch to smaller flats.

City area prices slipped 0.9 per cent in September from the preceding month after remaining unchanged in August.

Suburban apartments posted a dip of 0.6 per cent after eking out a 0.3 per cent gain in August over July.

Resale homes in the city centre have been hit by the cooling measures, including extra taxes on foreigners, while the supply of unsold luxury homes has increased and developers are offering discounts at new projects.

"Even though wealthy buyers may be able to afford the levies... or do not require a loan, some of them do not like the notion of being restricted in buying," said Mr Ong Kah Seng, director of R'ST Research.

Prices of resale homes are expected to dip by 8 to 10 per cent over the next year on the back of sagging demand, said property consultants, as the Government has signalled that the cooling measures and lending rules are unlikely to be lifted any time soon.

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