http://www.straitstimes.com/archive/...llers-20140206

Gloomier prospects for property sellers

Mortgage curbs and lower prices at nearby launches depress market

Published on Feb 06, 2014

By Cheryl Ong


SOME home owners in the upscale Tanglin and Alexandra areas are reducing their expectations of just how much their properties can fetch.

They have been forced into this painful reappraisal by lower price tags at nearby launches and weak demand after measures including curbs on mortgages.

Prices were looking buoyant in the 2012 bull run, but last year prospects dimmed after the closely watched gap between new home and resale prices narrowed.

At the 384-unit Tanglin View in Prince Charles Crescent, for instance, owners have dropped their expectations from about $1,600 per sq ft (psf) on average a year ago to between $1,300 psf and $1,400 psf now, experts said.

It is much the same picture next door at Tanglin Regency, where asking prices have fallen from about $1,500 psf to under $1,400 psf in the same period.

Mr Ku Swee Yong, chief executive of property consultancy Century21, said buyers' expectations had been buoyed by stellar sales a year ago at the Echelon condo, across Alexandra Road, when developer City Developments moved 200 units at an average of $1,700 psf on the first sales day.

"Echelon took the expectations of sellers too high. It sold very well and eventually crossed the mark of about $2,300 psf, even though they started selling at $1,700 psf," said Mr Ku.

The good news is that sellers at these 15- to 20-year-old properties are still likely to enjoy capital gains as asking prices are significantly higher than when the units were launched.

Tanglin View units sold for $860 psf when launched in 1997, while Tanglin Regency moved units at $750 psf in 1995.

Newer development Ascentia Sky, launched in 2009 at around 1,300 psf and completed last year, has not been spared. Owners looking to sell at the 373-unit project were asking for $1,700 psf to $1,900 psf in the first half of last year, but this has since fallen to about $1,500 psf to $1,600 psf, checks on online property portals showed.

Property consultants pointed out that sellers have had to adjust their expectations in part because a debt-to-income cap introduced in late June had made it difficult for would-be buyers to get financing. Developers of new launches started to drop prices to stir buying interest as a result.

At Alex Residences in Alexandra, for instance, 150 out of 429 units were shifted at $1,650 psf on the first day of sales in November. Developer Singland said that the project would have been priced above Echelon "under normal circumstances".

"A genuine home seeker looking for a resale property is in an advantageous position," said Mr Mohamed Ismail, chief executive of property agency PropNex. "Because of competition from sensitive pricing at new launches, it would not make sense for sellers to hold prices at the previous highs in late 2012."

Mr Ku added that buyers upgrading from public homes also have less cash to stump up for a private home now, after median cash-over-valuations tumbled from $35,000 in January last year to $5,000 in December.

This means that sellers have to be more realistic when putting their properties on the market.

Data released earlier this month showed that resale home prices slipped 0.2 per cent in December from the preceding month, the fourth straight month of falling prices.

Upcoming launches are likely to pose even more competition for resale home owners, especially if they are nearby, said Ms Christine Li, research head of property firm OrangeTee.

"But over the past year developers have paid high land costs, so there shouldn't be any significant moderation in new launch prices. That should still hold up resale prices in areas where there is less competition," she said.

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LOWER EXPECTATIONS

TANGLIN VIEW

One year ago: Average of $1,600 psf

Now: Between $1,300 psf and $1,400 psf

ASCENTIA SKY

One year ago: Between $1,700 psf and $1,900 psf

Now: Between $1,500 psf and $1,600 psf

ALEX RESIDENCES

Launched at: $1,650 psf. Developer Singland says it should have been priced above $1,700 psf