Consultants see no glut in
private homes
Business Times: Sat, Apr 28
SOME property consultants are
starting to switch their views on
the private housing market from
an oversupply story to one of
potential shortage, especially in
the hot-selling Outside Central
Region (OCR), based on the
latest Urban Redevelopment
Authority supply and demand
numbers.
Even as official figures show that
developers launched and sold a
record number of private homes
in the first quarter, URA noted
that this was fuelled by small
apartments that developers have
been pushing to keep lump-sum
prices affordable.
The URA's benchmark private
home price index fell 0.1 per
cent quarter-on-quarter (qoq) in
Q1, matching its earlier flash
estimate.
However, it was the industrial
property market that
outperformed every other
segment of private real estate
space, both in terms of price and
rental.
The price index for industrial
property rebounded 7.3 per cent
from the previous quarter. This,
after slowing down to a 4 per
cent rise in Q4 2011 from a 7 per
cent increase in Q3 2011. The
office price index was unchanged
while the shop price index was
up 0.2 per cent.
Likewise, URA's All Industrial
rental index rose 1.8 per cent in
Q1, surpassing gains of 0.3 per
cent for the private residential
rental index and 0.1 per cent for
the shop rental index and a 0.5
per cent dip in the office rent
index.
Developers launched 6,903
private homes in Q1, up 68.2 per
cent. Their sales rose 81.1 per
cent to 6,526 units. About four-
fifths, or 5,275 units, of the sales
came from OCR, where mass-
market homes are located.
Credo Real Estate executive
director Ong Teck Hui pointed
out that the number of units
developers sold in OCR in Q1
was about half the 10,374 they
sold in the same region last year.
Meanwhile, the stock of homes
that have yet to be sold in
uncompleted projects with
planning approvals (either
provisional or written permission)
fell from 39,184 at end-Q4 to
36,552 at end-Q1, pulled down
by a 15.8 per cent drop in OCR
to 16,928.
"What we need to watch out for
is whether the build-up in
potential supply is too slow
relative to market conditions
especially in OCR," said Mr Ong.
Savills Singapore research head
Alan Cheong noted that the
sales of 6,526 units works out to
26,104 on an annualised basis.
"At this rate, initial fears of
having 47,819 yet-to-be-sold
units (including those in projects
without planning approvals) in
the pipeline causing an
oversupply become passe,
reversing market watchers'
perception of a gross oversupply
to gross undersupply situation."
URA's sub-index for non-landed
private home prices in OCR rose
1.1 per cent in Q1, suggesting
that the uptrend could continue.
In contrast, indices for Core
Central Region (CCR), which
includes the choicest residential
locations, and Rest of Central
Region (RCR) each slipped 0.6
per cent.
DTZ Asia-Pacific research head
Chua Chor Hoon expects OCR to
remain the price outperformer,
either staying flat or easing up to
5 per cent for the full year, while
CCR will be worst hit, with a 5-10
per cent slide.
An interesting trend is that in all
three regions, prices of
uncompleted non-landed homes
were stronger than completed
properties, reflecting weaker
prices in the resale market.
Although the total number of
resales of completed private
homes slipped 29.4 per cent to
1,906 in Q1, this was due to
weak numbers in January and
February that were partly offset
by a significant recovery in
March.
"As prices of completed
properties in CCR and RCR have
fallen in Q1, buyers are moving
back to the secondary market
where they see more value for
money," says DTZ's Ms Chua.
Subsales - secondary market
deals of uncompleted properties
and often a proxy for speculative
activity - halved from 632 in Q4
to 317 in Q1. Their share of total
private home transactions
slipped to just 3.6 per cent for
Q1, following the steep seller's
stamp duty (SSD) rates
introduced in January 2011 to
deter short-term trading of
private homes. This has shrunk
the pool of buyers who can
offload their units in the subsale
market without incurring the
SSD.
At the same time, those thinking
of buying a property these days
are more likely to head for a
new developer launch. This
allows them to stretch the
purchase payment over the
three years or more that it takes
for the project to be completed
and by which time they could
sell their property without having
to incur any SSD or they could
chalk up just a small SSD.
The most recent property
cooling measure - the additional
buyer's stamp duty, which is as
high as 10 per cent for
foreigners who buy any
residential property here -
introduced on Dec 8, seems to
have had its desired effect. URA
figures show that foreigners'
share of uncompleted homes
sold by developers dived to 6.2
per cent in Q1 from 17 per cent
in Q4. With speculative demand
and foreign buying curbed, the
main bugbear for the authorities
now is exuberant developer
sales, analysts say.
URA figures show that 27 per
cent of the 6,526 units (including
68 completed units) comprised
small units (of 50 square metres
or below), up from 15 per cent
in Q4. The 27 per cent is
probably an all-time record.
Units costing up to $750,000
made up 42 per cent of
developers' Q1 sales, up from 25
per cent in Q4 and the highest
since 52 per cent in Q1 2009,
when property buying fervour
recovered after the global
financial crisis.
Reports have shown that the
bulk of small apartment buyers
have HDB addresses and are
hence unlikely to be considering
upgrading to a shoebox unit,
suggesting some exuberance in
investment demand for small
units - although some may be
buying for their children.
Source: Business Times ©
Singapore Press Holdings Ltd.
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Originally Posted by radha08
Many lao jiaos in this forum are better consultants.
