http://www.businesstimes.com.sg/prem...-keep-climbing

Published June 09, 2012

Resale home deals keep climbing

HDB resale prices rise 2.05% in past two months; non-landed rent volumes decline

By Mindy Tan


THE number of private resale non-landed home transactions continued to climb in April-May, on the coattails of a surprising turnaround in March.

According to data provided by the Singapore Real Estate Exchange (SRX), the total number of caveat and non-caveat transactions as at May 31 was 2,551, beating the 2,117 in Q1, and just shy of the 2,601 transactions in Q4 2011.

This latest figure is particularly surprising given that the spike in March volumes was not expected to be sustained, said Savills Singapore research head Alan Cheong.

In April, Savills' analysis of URA Realis caveats data found that 1,142 resale deals for private homes (excluding ECs and en bloc sales) were done in March. This was double February's figures and more than treble January's. Figures as at April 24, however, showed that only 332 resale transactions had been done thus far.

"The numbers (for April) were healthy, but they seemed to have died off compared to March," said Mr Cheong, who expects transaction volumes to hit 3,500 this quarter.

Chua Chor Hoon, head of Asia Pacific Research at DTZ, expects resale volume in this quarter to be around 3,300 units. "Buyers who adopted a wait-and-see stance after the introduction of the ABSD (additional buyer's stamp duty) are re-entering the market, buoyed by the exuberant return in buying sentiment in the primary market. They are also turning to the secondary market for better value as new launches set new benchmark prices."

That the April-May numbers beat Q1 figures is surprising, since the external economic environment has worsened over the last three months, said OrangeTee research and consultancy head Tan Kok Keong.

"This could be a reflection of fundamental occupier demand, which is probably what is driving sales numbers," he said.

In similar vein, Housing & Development Board (HDB) resale prices have risen 2.05 per cent in the past two months, to $438,800 from $430,000 in Q1.

The top three towns which witnessed price increases include Bukit Panjang (up 7.6 per cent at $460,000), Bukit Merah (up 7.55 per cent at $591,500), and Marine Parade (up 7.37 per cent at $502,500).

"HDB resale market prices have reached their peak and are not expected to further increase in price in the coming quarters as buyers are becoming reluctant to pay high COVs (cash over valuations). Overall, the HDB price increment will be muted with no significant growth in the coming months," said Carolyn Goh, corporate communications manager of PropNex Realty.

On the rental front, private non-landed rent volumes fell 33.2 per cent from 7,504 in Q1 to 5,014 in April-May. Rental yield fell 25 basis points to 4 per cent.

In the Core Central region (CCR) rental yield fell from 3.42 per cent to 3.19 per cent, while in the Rest of Central region (RCR), rental yield fell 12 basis points to 4 per cent. In the Outside Central Region (OCR), rental yield fell 20 basis points to 4 per cent.

Said Savills' Mr Cheong: "The interesting thing is, yield is still strong in RCR and OCR. My suspicion is that a lot of this is small-format units."

While yields have been trending downwards over the past year, they have not yet reached an "alarming" stage, said Mr Cheong. "Because interest rates are low, refinancing is also low, and people are willing to take the lower yield risk," he said.

Said OrangeTee's Mr Tan: "The volume of rental has come down quite significantly (and) could be a result of the recent tightening of work permits and immigration policies. . . Going forward, these are signs for investors to be a bit more careful."