Redas-NUS property index eases in Q1

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http://www.businesstimes.com.sg/sub/...07140,00.html?

Published April 29, 2011

Latest property measures more effective: NUS study

NUS residential price index flat after Jan, Aug '10 compared to earlier measures

By KALPANA RASHIWALA


(SINGAPORE) A study by NUS's Institute of Real Estate Studies suggests the two latest rounds of property cooling measures on Aug 30 last year and Jan 13 this year may have been more effective in taming prices of completed non-landed private homes than the earlier two series of tightening measures in September 2009 and February 2010.

NUS' overall Singapore Residential Price Index (SRPI) has inched up about 0.19 per cent on average per month since the January measures were introduced. It also increased only about 0.12 per cent on average per month from the time the end-August 2010 measures were introduced till December last year.

In contrast, the September 2009 and February 2010 cooling measures were followed by average monthly increases in the SRPI of 1.13 per cent and 1.23 per cent respectively.

The index covers only completed non-landed private homes.

Average monthly sales volumes of non-landed private homes - covering transactions in both the primary and secondary markets but excluding executive condos (which are a hybrid of public and private housing) - have shrunk to 1,391 after the latest Jan 13 cooling measures (based on URA Realis caveats data up to April 21).

The monthly sales volume following last August's tightening package was 2,490 units, while the figure after the February 2010 cooling measures was 2,907.

'We're now seeing the cumulative effect of continuing tightening measures implemented since September 2009,' said an analyst.

Associate Professor Lum Sau Kim of NUS's Institute of Real Estate Studies and Department of Real Estate said: 'The policy interventions sought to tighten leverage and dampen speculative build-up in the housing market.'

'Other than the February 2010 measures, the rate of price appreciation for non-landed private homes and sales volumes have declined following each policy date. However, these declines have been temporary and suggest that other drivers of home price and transaction activity may have overwhelmed the macro-prudential measures,' she added.

Market watchers recapitulated some of the factors that continue to fuel interest in Singapore's property market despite steps by the authorities to try to dampen the market: high liquidity, diversion of hot money from overseas markets like China and Hong Kong to Singapore's real estate market, the low interest rate environment and the appeal of property as a hedge against inflation.

DTZ's head of consulting & research (SE Asia) Ong Choon Fah said: 'Usually there will be a knee- jerk reaction every time there is a policy as market participants start to evaluate the likely impact. They want to wait for a while to see what happens and if nothing much happens, they start to enter the market again.'

Mrs Ong also recalled that the government began implementing the cooling measures in a very calibrated way starting with increasing land supply. 'But when these didn't seem to produce the desired result, they started to address the demand side as well and that's when we began seeing a more significant impact on the market.

'And as we start to see all the supply materialising both in terms of marketing of new projects and physical completion of projects launched earlier, reality will hit home. A lot of people bought properties for investment and will need to find somebody to lease them or sell them to.'

NUS's latest flash estimates for its March 2011 SRPI also showed that prices of completed apartments and condos fared better in suburban locations than in the poshest areas.

The SRPI sub-index for the Central Region, which covers districts 1-4 and 9-11, dipped 1.9 per cent month-on-month in March, according to NUS's flash estimates. This sub-index has appreciated 2.6 per cent since the end of last year and 8.6 per cent year on year.

In contrast, the sub-index for the Non-Central region, where suburban mass-market condos are located, appreciated 1.7 per cent month on month in March. The flash estimate for March was up 3.8 per cent year to date and 14.4 per cent year on year.

As a result, the overall SRPI rose 0.1 per cent month on month in March; the March flash estimate reflection price gains of 3.3 per cent year to date and 11.9 per cent year on year.

Meanwhile, Frasers Centrepoint and Far East Organization have sold 336 of the 500 units released at their Eight Courtyards condo in Yishun since they began previewing the project on April 15. The average price is $795 per square foot. The 99-year leasehold project has 654 apartments.

[mr funny]

[mr funny]

http://www.businesstimes.com.sg/sub/...36962,00.html?

Published April 30, 2011

Redas-NUS property index eases in Q1

Sentiment among Redas members dented by Jan 13 government market cooling measures

By KALPANA RASHIWALA


THE Redas-NUS Real Estate Sentiment Index (RESI) slipped in the first quarter of this year, as the Jan 13 cooling measures dented sentiment among members of the Real Estate Developers' Association of Singapore.

The Current Sentiment Index, where respondents rate overall Singapore real estate market conditions now compared with six months ago, fell from 5.7 for Q4 2010 to 4.9 for Q1 2011.

The index ranges from 0 to 10, with a score below 5 indicating deteriorating market conditions; a score above 5 shows improving market conditions.

The Future Sentiment Index, where respondents rate overall property market conditions over the next six months, too slipped from 5.8 in Q4 to 5.1 in Q1. As a result, the Composite Sentiment Index, which is the average of the two indices, fell from 5.7 to 5.0. However, the latest Q1 2011 indices are still above the Q3 2010 readings of 4.8 for all three indices.

The latest Q1 survey showed that 69 per cent of developers polled expect prices to remain flat over the next six months, more than a two-fold jump from 30 per cent in Q4 2010. In contrast, 62 per cent in the Q4 survey had anticipated a moderate price rise, against just 14 per cent in the Q1 survey.

Furthermore, about 62 per cent of developers in the most recent study expect more private homes to be launched in the next half year, down from 74 per cent in the previous quarter's survey.

Respondents in the Q1 poll listed the top three potential risks that may adversely impact market sentiment in the next six months as rising inflation and interest rates (cited by 75 per cent of respondents), slowdown in the global economy (68 per cent) and further government intervention in the real estate market (63 per cent). The other key risks are increase in land supply (59 per cent), rising construction costs (57 per cent) and excessive supply of new property launches (50 per cent).

Net balances of current performance in the prime residential and suburban residential markets of +15 per cent and +1 per cent respectively for Q1 2011 were down sharply from +44 per cent and +22 per cent respectively for Q4. This reflects a decline in the proportion of respondents who are positive on the current performance of these two sectors relative to that of six months ago.

Net balances of future performance for prime and suburban housing markets of +6 per cent and -16 per cent too reflect a deterioration from +53 per cent and -4 per cent. Nonetheless, things are not as grim as they were in the Q3 2010 survey, when respondents recorded a -43 per cent net balance for future performance of the suburban residential market.

On a brighter note, current performance and outlook in business park/high tech space and industrial/logistics sectors improved substantially in Q1. Overall, the outlook for Singapore's real estate market remains positive, supported by the buoyant office (+62 per cent) and hotel/serviced apartment (+58 per cent) sectors, a stronger business park/high tech (+52 per cent) and industrial/logistics (+48 per cent) sectors, as well as a stable retail (+22 per cent for prime retail and +30 per cent for suburban retail) sectors.

The net balance percentage is the difference between the proportion of respondents who have selected the positive options (like 'better' and 'increase') and the proportion of respondents who picked the negative options ('worse' and 'decrease'). A positive net balance hence denotes net positive sentiment (optimism) and a negative net balance indicates net negative sentiment (pessimism).

The Q1 survey also showed that 19 per cent of developers expect less interest in the Government Land Sales Programme in the next six months, compared with 9 per cent in the Q4 study. The percentage of developers who expect less interest in private en bloc sales too rose from 2 per cent to 33 per cent.

Respondents were also polled on their views on the impact of the Jan 13 cooling measures. Slightly over half or 51 per cent of developers polled expect significant impact on subsale activity and buying for investment purpose in the next six months; only 9 per cent see a significant impact on purchases for owner occupation and 23 per cent see the same effect on take-up rate of new residential launches. Overall, 69 per cent of all survey respondents expect the measures to have a moderate to significant impact on the pricing of new residential launches over the next six months while 68 per cent foresee spillover into non-residential property investment as a result.

Redas CEO Steven Choo said: 'Weaker market sentiment and rising costs, especially in land price, building materials and labour, point to a much more challenging operating environment for the industry in 2011.'

International Property Advisor chief executive Ku Swee Yong said: 'The market (investors, developers) has become more circumspect especially after the catastrophic earthquake in Japan on March 11 and its aftermath. In addition to the policy measures, investors were also affected by negative news of unrest in the Middle East, inflationary pressures, continued weakness in Portugal, Ireland, Italy, Greece and Spain, etc. Hence the recent outlook (in March-April) is mixed.'

Credo Real Estate executive director Ong Teck Hui said: 'A slight softening in sentiments is not surprising, following the cooling measures in January and with further intervention cited as one of the three top potential risks. However, the lower index does not necessarily mean a downbeat outlook. It's just that things are not as optimistic as before.'

Redas issued the survey forms on March 16 and collected submissions until earlier this week. It received 68 responses.