Home prices slip 0.8% m/m in Dec

[reporter2]

http://www.businesstimes.com.sg/sub/...75629,00.html?

January 30, 2012, 12.54 pm (Singapore time)

Home prices slip 0.8% m/m in Dec

By KALPANA RASHIWALA


SINGAPORE - The overall Singapore Residential Price Index (SRPI) compiled by National University of Singapore slipped 0.8 per cent in December compared with November.

The subindex for the Central Region (excluding small apartments) fell 0.4 per cent month on month, a smaller dip than the 1 per cent drop for the Non-Central Region (also excluding small apartments).

However, the sub-index for small apartments islandwide (up to 506 sq ft or 47 sq metres) rose 3.4 per cent.

These figures are based on flash estimates released on Monday (Jan 30) by NUS' Institute of Real Estate Studies.

The Central Region comprises Districts 1-4 (which includes the financial district and Sentosa Cove) as well as the traditional prime residential districts of 9-11.

SRPI tracks prices of completed private apartments and condos, excluding executive condos.

[amk]

Finally, some numbers to show "property prices in SG are falling"

Hmmm CCR -0.4%, OCR -1% ... KBW must be happy

[Leeds]

The numbers were as at 19 Jan 12. In another word, prices already soften before CM5. It will be interesting to see Feb figures.

[kane]

Resale has been flattish for a long time. It's the new sale that's been cheong-ing.

[howgozit]

I suspect new sales are going to lose some steam as the disparity of the demand of resale and new sales widens. It won't take too long before people start to notice the resale market again.

[amk]

Well doesn't matter. At least some numbers show a fall. KBW is dying to see results. Now he has it.
I always believe most of the CMs benefit new sales on purpose. It's good for the construction and related industries. Otherwise why would the SSD not start from TOP ? And the upfront down payment is delayed by up to 2 yrs for new sale.

[Montaigne]

Well doesn't matter. At least some numbers show a fall. KBW is dying to see results. Now he has it.
I always believe most of the CMs benefit new sales on purpose. It's good for the construction and related industries. Otherwise why would the SSD not start from TOP ? And the upfront down payment is delayed by up to 2 yrs for new sale.

Make sense, resale only benefit sellers and govt, no effect on economy.

[Leeds]

According to reports, most pf the new launches were purchased by first timers and upgraders. Season investors usually do not go for new launches. Should the market corrects as it should, first-timers and upgraders will end up buying high and achieving capital gain can be challenging.

Those who bought during the high of 1996 are just starting to breakeven as far as absolute price is concerned. I think the government is concerned with these group of people who may be highly gear for the properties they purchased on the high and when prices correct.

[teddybear]

Think many people believe so. So obvious! They definitely want people to buy new launch! Why? So obvious also!
If buy new launch and lose money how? So obvious also?

Well doesn't matter. At least some numbers show a fall. KBW is dying to see results. Now he has it.
I always believe most of the CMs benefit new sales on purpose. It's good for the construction and related industries. Otherwise why would the SSD not start from TOP ? And the upfront down payment is delayed by up to 2 yrs for new sale.

[avo7007]

One data point only! Akan datang.............

[ysyap]

The numbers were as at 19 Jan 12. In another word, prices already soften before CM5. It will be interesting to see Feb figures.

Feb figures will shoot up coz of Hillier and Watertown... don't expect too much down from it...

[avo7007]

Feb figures will shoot up coz of Hillier and Watertown... don't expect too much down from it...

I think the index track completed projects only so Hillier and Watertown will have no direct effect on it.........

[Rosy]

Looks like I am right that resale prices suffered a contraction in the month of Dec which coincides with the start of the latest CM. Whereas URA quarterly index shows a positive growth.

Next few months will be very interesting to watch and it will determine whether it is just a knee jerk reaction or something bigger is coming.

[Leeds]

Resale price should continue to soften going forward given that most of the buyers are not first timers. Buyers of resale properties are usually seasoned investors or buyers and understand the market better.

[Worsty]

I suspect new sales are going to lose some steam as the disparity of the demand of resale and new sales widens. It won't take too long before people start to notice the resale market again.

As of now, for first timers that has no difficulty paying the mortgage but not the downpayment (decent paying job at the start but only worked 2-3 years with not much cpf contribution), going direct with the developer is the way to go.

There's extra cost such as reno to go if one go resale. So there must be a big enough gap in the pricing or at least, in how payment can be done for resale to capture this group of people.

[CCR]

Resale price should continue to soften going forward given that most of the buyers are not first timers. Buyers of resale properties are usually seasoned investors or buyers and understand the market better.

I think maximum 5% drop..... The support from low interest rates, rental income and no other alternative avenue for investment will provide a floor to the prices

[Eastboy]

I think maximum 5% drop..... The support from low interest rates, rental income and no other alternative avenue for investment will provide a floor to the prices

developers have such huge reserves i think they won't bother with massive price cuts and spoil market. the people going to suffer are the agents.

[howgozit]

As of now, for first timers that has no difficulty paying the mortgage but not the downpayment (decent paying job at the start but only worked 2-3 years with not much cpf contribution), going direct with the developer is the way to go.

There's extra cost such as reno to go if one go resale. So there must be a big enough gap in the pricing or at least, in how payment can be done for resale to capture this group of people.

Your point is valid. So the question is how big a gap before one starts to pay attention to the resale market.

I'll take Simei's two most closely situated condo (one new and one resale) average psf as an example. Modena is $900psf and My Manhattan is $1200psf.

For a 1000sqft home it is a whopping $300k difference plus associated costs.

[ikan bilis]

Well doesn't matter. At least some numbers show a fall. KBW is dying to see results. Now he has it.
I always believe most of the CMs benefit new sales on purpose. It's good for the construction and related industries. Otherwise why would the SSD not start from TOP ? And the upfront down payment is delayed by up to 2 yrs for new sale.

hur ??... got such thing arh? didn't know.... i thought no more dps liow...

or izit due to the progressive payment does not come so fast... like need wait until piling, floor constructed then pay 20% ??...

[hyenergix]

Your point is valid. So the question is how big a gap before one starts to pay attention to the resale market.

I'll take Simei's two most closely situated condo (one new and one resale) average psf as an example. Modena is $900psf and My Manhattan is $1200psf.

For a 1000sqft home it is a whopping $300k difference plus associated costs.

Resale will be a zombie for a long time. Sub-sale still has hope if the property was launched in 2009 or 2010. New launch is like an investment and saving plan now. When economy hopefully recovers by 2015 onward, the property market sentiment will also pick up.

[kane]

I think when the resale gap reaches 35%, people will probably start to look towards resale.

[Rosy]

Resale will be a zombie for a long time. Sub-sale still has hope if the property was launched in 2009 or 2010. New launch is like an investment and saving plan now. When economy hopefully recovers by 2015 onward, the property market sentiment will also pick up.

SG economy can drag on and finally give way on 2014/15?

[gn108]

We reached a major pivotal point - low volume/Zombie should continue for at least 2 quarters or so....

Resale will be a zombie for a long time. Sub-sale still has hope if the property was launched in 2009 or 2010. New launch is like an investment and saving plan now. When economy hopefully recovers by 2015 onward, the property market sentiment will also pick up.

[Worsty]

Your point is valid. So the question is how big a gap before one starts to pay attention to the resale market.

I'll take Simei's two most closely situated condo (one new and one resale) average psf as an example. Modena is $900psf and My Manhattan is $1200psf.

For a 1000sqft home it is a whopping $300k difference plus associated costs.

300k is big enough for me in my opinion. That's 60k downpayment difference (if buying new) which could otherwise be put into reno. For me, the downpayment difference should tally with the estimated cost of reno that you'll be willing to pay assuming all conditions to be similar.

Speaking from the point of buyers for stay rather than investment. Then again, if it's for rental, i guess it's worthwhile getting resale too at that difference in prices since the yield would be better but that's just me. Everyone here would be looking at it differently.

[Rosy]

some new launches psf is much higher than older resale. However the quantum is in fact lower than resale when we compare 2bedder with 2bedder or 3 with 3.

So it looks like recent OCR buyers do not mind a downgrade in living spaces and go for an upgrade in living 'status'

[howgozit]

For renovations, don't forget that new apartments need some doing up as well however little. Basic fittings, lightings, curtains, painting...etc adds to costs. A resale may only need a re-paint or even just a minor re-decoration.

So a resale may not be necessarily cost more to render it into a rentable/livable condition, many times in fact I have found it to in fact cost less. Furthermore a resale is immediately available to capitalise returns.

I am most puzzled about the big gap which is in excess of 33%. Where is the upside for those who buy new launches? By the time these people want to (or have to) sell, the properties are considered resale and they have to compete against their neighbours which are a third cheaper at the time of purchase. Where is their bargaining power?

My conclusion is that these people buying these new launch OCR condos at these ridiculous prices are going in blindly. Its the Asian "Kiasu" mentality at work. Everyone wants to get in on the action regardless of the unreasonable mark-up by the developers

It's a set-up for a bubble that is being staved-off by a low interest and high employment rate environment.

300k is big enough for me in my opinion. That's 60k downpayment difference (if buying new) which could otherwise be put into reno. For me, the downpayment difference should tally with the estimated cost of reno that you'll be willing to pay assuming all conditions to be similar.

Speaking from the point of buyers for stay rather than investment. Then again, if it's for rental, i guess it's worthwhile getting resale too at that difference in prices since the yield would be better but that's just me. Everyone here would be looking at it differently.

[DC33_2008]

I think it is the effect of CMs with SSD.

For renovations, don't forget that new apartments need some doing up as well however little. Basic fittings, lightings, curtains, painting...etc adds to costs. A resale may only need a re-paint or even just a minor re-decoration.

So a resale may not be necessarily cost more to render it into a rentable/livable condition, many times in fact I have found it to in fact cost less. Furthermore a resale is immediately available to capitalise returns.

I am most puzzled about the big gap which is in excess of 33%. Where is the upside for those who buy new launches? By the time these people want to (or have to) sell, the properties are considered resale and they have to compete against their neighbours which are a third cheaper at the time of purchase. Where is their bargaining power?

My conclusion is that these people buying these new launch OCR condos at these ridiculous prices are going in blindly. Its the Asian "Kiasu" mentality at work. Everyone wants to get in on the action regardless of the unreasonable mark-up by the developers

It's a set-up for a bubble that is being staved-off by a low interest and high employment rate environment.

[amk]

My conclusion is that these people buying these new launch OCR condos at these ridiculous prices are going in blindly

just like other members pointed out , it's simply because :

some new launches psf is much higher than older resale. However the quantum is in fact lower than resale

and

I think it is the effect of CMs with SSD.

so if you *have to invest in property*, new sale small quantum is the way to go. never mind the high psf.

[howgozit]

IMHO

Taking Modena's last transacted (which is unfortunately in Oct last year), one can see My Manhattan sold the same time at an unreasonable premium. Can't be the quantum as My Manhattan is pricier.

MODENA---------1,269,000-1,410sqft-900psf---Oct-11
MY MANHATTAN--1,330,000-1,076sqft-1,236psf-Oct-11

I do agree the CMs definitely has played a part but only at the initial part. If an astute person takes a medium term outlook at the investment aspect of the purchase than he will see that the upside potential, ROI...etc is challenging.

My suspicion is that many Singaporeans have fallen into the trap of the sweet talking cunning agents at showflats of new launches. I can understand a small gap in prices but 30+% is ridiculous..

[amk]

...If an astute person takes a medium term outlook at the investment aspect ...

an astute investor would not have stepped into pty after CM4 (60% LTV and 4 yr SSD)

I figured you are very polite in your words but what you implied is obvious

IMHO if the market turns sour, this group will be hit hard. These are not the group that have the capacity to hold. Therefore I dun know how KBW is going to tackle this.