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Thread: Resale condo volume, prices slide in May

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    Default Resale condo volume, prices slide in May

    http://www.businesstimes.com.sg/arch...e-may-20140610

    Published June 10, 2014

    Resale condo volume, prices slide in May

    Rental volume up slightly but rents slip amid weak leasing conditions

    By lee meixian

    [email protected] @LeeMeixianBT


    LOAN-RESTRICTION measures and buyers' stamp duties aside, two other factors - aggressive discounts offered by developers on new units and weak leasing conditions - drove resale transactions and prices of non-landed private homes down last month.

    The developers of a few major condominium projects recently cut prices to drive up sales and clear their stock by their deadlines, failing which they would have to pay extension charges. This move has siphoned some demand away from the resale market, analysts said.

    It has also not helped the resale market that purchases there take a few months to complete, by which time the market would have entered the second half of the year, when leasing activity is traditionally slower, given that fewer expatriates come here then than in the first half. This further tempered demand.

    Flash figures released by the Singapore Real Estate Exchange (SRX) yesterday showed that the number of condo units resold in May fell 7.5 per cent month-on-month to 421 units. This is 42.6 per cent lower than the 734 units resold in May last year.

    Resale prices continued to inch down, falling 0.3 per cent in May, driven mostly by a 2.9 per cent price plunge in the luxury market in the core central region; prices wilted by 0.3 per cent in the city fringes. Only prices in the suburban areas bucked the trend, climbing 0.6 per cent.

    The leasing front stayed flat, said SLP International executive director Nicholas Mak.

    Rental volume rose slightly - up 3.7 per cent - to 3,120 whole units, from April's 3,010 transactions, but rental prices slipped 0.8 per cent. Since January last year, rental prices have fallen by 6 per cent.

    Explaining the opposite directions in which rental transactions and prices moved last month, R'ST Research director Ong Kah Seng said this could have come from landlords being eager to close deals and offering competitive rentals to tenants.

    ERA Realty key executive officer Eugene Lim added: "Some owners may be willing to lower their asking rents in order to secure tenants sooner, as the cashflow will help in servicing their mortgages."

    Other factors that fed into the weak leasing market include the tightened housing budgets of expatriates and foreign professionals, and the rise in available leasing options as more private residential developments were completed.

    More than 80,000 private residential units, including landed ones, are expected to receive their temporary occupation permit between this year and 2017, said the URA.

    Looking ahead, analysts expect prices in the secondary market to weaken gradually - 5 to 10 per cent - over the next 12 months as mortgage rates hold steady. Rents, too, will keep falling with the ample pipeline stock and the tighter immigration policy in Singapore.

    R'ST Research's Mr Ong warned that, as resale transactions get more limited, their monthly price movements will become more volatile.

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