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Thread: High-end rally seen as city centre homes hit peak

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    Default High-end rally seen as city centre homes hit peak

    http://www.businesstimes.com.sg/sub/...71140,00.html?

    Published January 4, 2011

    Luxury home prices defy market lethargy

    Overall price growth for private homes, HDB resale flats slowed in Q4 but high-end hit new high

    By UMA SHANKARI


    (SINGAPORE) A surge of interest in high-end and luxury homes pushed prices in the segment, which has underperformed the rest of the market over the last two years, to a fresh all-time high in Q4 2010.

    But in the rest of the market, prices of private homes as well as HDB resale flats grew more slowly in the fourth quarter compared to the first three quarters of last year.

    Flash estimates released by the Urban Redevelopment Authority (URA) yesterday show that overall private housing prices edged up 2.7 per cent in Q4 to a fresh record high.

    Private home prices in Singapore first surpassed the former all-time peak achieved in 1996 in Q2 2010, and then continued to inch upwards in Q3 and Q4. For the whole of 2010, prices climbed 17.6 per cent.

    But the gain in fourth-quarter prices was the smallest in six quarters, URA's data shows.

    The high-end market was a notable exception. Non-landed home prices in the Core Central Region (CCR) micro-market, which includes the prime districts Marina Bay and Sentosa Cove, rose 2.3 per cent in Q4, faster than the 1.6 per cent growth seen in Q3.

    This pushed luxury home prices to a new all-time high, outstripping the previous peak in Q1 2008.

    By contrast, the price index for Rest of Central Region (RCR) rose by 1.7 per cent in Q4, down from 2.3 per cent in Q3. And in the Outside Central Region or OCR (where suburban condos are located), prices climbed 1.6 per cent in Q4 after increasing 2.2 per cent in Q3.

    Analysts attributed the slowdown in price growth in the RCR and OCR areas to resistance from buyers for increasingly expensive projects.

    Price growth in the CCR region, by contrast, rose on the back of the prevailing strong economy and low interest rates, which once again enticed foreign investors to pick up luxury homes in Singapore.

    'In 2010, much of the activity was focused on the mass and mid-market segments,' said Joseph Tan, CBRE's executive director for residential. 'Foreigners stayed away, thinking that the lack of transaction activity in the high-end segment would lead to a fall in prices and allow them to buy the properties for less.'

    But since most high-end home owners proved to have 'holding power', the anticipated fall in luxury home prices did not occur and foreign buyers are slowly returning to the luxury market, Mr Tan said.

    The number of foreign home buyers rose by 14 per cent in 2010 compared to 2009, said Knight Frank's head of consultancy & research Png Poh Soon.

    'The tightened regulations in Hong Kong and aggressive anti-speculation rules in China caused some investors to shy away from those markets and directed them to Singapore,' Mr Png said. 'High net worth foreign buyers would definitely consider the Singapore property market to park their money.'

    Analysts also noted that while the latest round of cooling measures introduced by the government on Aug 30 have not dampened transaction volumes, they appear to have at least moderated price growth. A record 15,500-16,500 new private homes are estimated to have been sold in 2010, despite demand-side and supply-side measures introduced periodically throughout the year.

    CBRE's Mr Tan said that transaction volumes were still high in 2010 as many potential buyers are still out looking for units.

    But the price growth has slowed as these buyers - especially those house-hunting in the mass-market segment - are sticking to a budget.

    Over at the HDB market, prices of resale flats rose 2.4 per cent in Q4 2010 - a slower rate of growth than the 4 per cent increase in Q3 2010 - according to flash estimates from the Housing & Development Board.

    But while the resale price index was pushed to yet another all-time record, the transaction volume fell.

    The resale volume declined by about 21 per cent in Q4, HDB said. And the median cash-over-valuation (COV) amount is also estimated to have fallen by $7,000 or 23 per cent, from $30,000 in Q3 2010 to $23,000 in Q4 2010.

    In fact, COV levels declined progressively over the last three months of 2010, according to data from PropNex.

    The firm's chief executive, Mohamed Ismail, said that according to monthly transactions handled by his company in Q4 2010, the median COV fell from $26,000 in October to $23,000 in November and to $20,000 in December.

    But overall resale prices are still climbing in spite of falling COV levels due to a time lag, he explained

    'Valuations for resale flats that were transacted in Q4 2010 were based on prevailing caveats for flats in the vicinity,' Mr Ismail said.

    'There is therefore a certain lag time of about two months and hence the (HDB) prices overall are still climbing.'

    Looking ahead, growth in private home prices may slow to anywhere between 3 per cent and 10 per cent in 2011, analysts predicted.

    But most are more bullish on luxury home prices, which some said could climb by up to 15 per cent this year.

    In the mass-market segment, the ample supply of new homes coming onstream from the beefed-up 2010 Government Land Sales programme should help to keep price growth to less than 5 per cent, analysts said.

    And in the HDB resale market, prices are expected to grow by 5-10 per cent in 2011. The overall median COV level should also fall to about $18,000 to $20,000 in Q1 2011, said Mr Ismail.


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    Default High-end rally seen as city centre homes hit peak

    http://www.straitstimes.com/Money/St...ry_620277.html

    Jan 4, 2011

    High-end rally seen as city centre homes hit peak

    But URA data shows private property prices overall moderating in Q4

    By Esther Teo


    NEW data on property sales tells a mixed tale - city centre apartments have made a comeback and values are now likely at record levels but private home prices overall are moderating slightly.

    Cooling measures introduced in August last year seem to have taken a little of the heat out of the market with prices for non-landed homes up 2.7 per cent in the three months to Dec 31 - slightly down on the 2.9 per cent increase in the third quarter.

    Signs of moderation were even starker among private suburban apartments, with prices up just 1.6 per cent in the fourth quarter, down from the 2.2 per cent increase seen in the third.

    But even a slower fourth quarter could not take the shine off what has been a bumper year for private homes, no matter where you live - or bought.

    Prices of apartments in the city fringe jumped 17.5 per cent last year while they were up 14.5 per cent in suburban spots and 14.3 per cent in the city centre, according to flash estimates from the Urban Redevelopment Authority (URA) yesterday.

    All in all, prices for private homes - landed and non-landed - surged 17.6 per cent last year.

    The city centre, which has much of Singapore's high-end property, was clearly the laggard last year but the URA numbers show that a rally in this zone has finally kicked in.

    Prices of private apartments in the city centre increased 2.3 per cent in the last quarter and are now 2.1 per cent higher than their previous peak, in the first quarter of 2008.

    Experts tip that these prices could rise a further 8 to 15 per cent this year given the increasing number of foreigners buying here, healthy economic growth and low interest rates.

    Mr Png Poh Soon, head of research and consultancy at Knight Frank, said that foreigners made up 24.7 per cent of buyers last year - up on the 21.8 per cent in 2009. 'The tightened regulations in Hong Kong and aggressive anti-speculation rules in China will inevitably direct some investors from these buoyant markets to Singapore,' he added.

    The trend was already evident in the last quarter when Chinese buyers edged out Malaysians as the largest proportion of foreign transactions for the first time, Mr Png said.

    Ms Tay Huey Ying, director of research and consultancy at Colliers International, expects city centre prices to jump by between 10 and 12 per cent this year while the overall market should see values rise by 10 per cent.

    Experts said that buying momentum for high-end homes is likely to continue, with prime projects such as Ardmore 3 and Le Nouvel Ardmore on the way after recent successful launches such as Robinson Suites, Suites at Orchard and The Glyndebourne.

    Ms Tay added that slowing price rises in suburban homes - up just 1.6 per cent in the fourth quarter - should keep further cooling measures at bay in the short term.

    Mr Ong Kah Seng, senior manager of Asia-Pacific research at Cushman & Wakefield, added that modest price rises in suburban condos despite buoyant new sales in November and last month showed that the Government's measures have stabilised prices.

    But he believes the cooling steps will have less impact on the top end.

    'Prime residential properties, which have been the laggard in 2008 to 2010, are expected to shine in 2011, while those in (suburban areas) may be relatively restrained... due to the large forthcoming supply which intensifies competition among developers and provides more choices for home buyers,' he added.

    The URA estimates capture mainly transactions in October and November as the cooling measures intended to quell speculation - including tighter lending rules for buyers with second mortgages - started gaining traction. The data will be updated in four weeks.

    Separately, Far East Organization said yesterday that 253 out of 299 Soho-style - small office or home office - apartments released at 338-unit The Tennery at Bukit Panjang have sold for $950 to $1,350 per sq ft.

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