http://www.businesstimes.com.sg/arch...ugust-20140909

Published September 09, 2014

Resale prices of condos up a tad in August

But that doesn't mean the market has turned around, warn analysts

By lee meixian

[email protected] @LeeMeixianBT


[SINGAPORE] Resale prices of non-landed private homes rose a slight 0.4 per cent in August, compared to July, but analysts say this cannot be construed as a turnaround in price performance. They pin it instead on some pent-up revival in buyers' interest, among other factors.

This was according to flash data released by the Singapore Real Estate Exchange (SRX) on Monday.

August's price gain was surprisingly led by properties in the city area and city fringe, which reported increases of 4.8 per cent and 1.5 per cent, respectively. In contrast, resale prices in the suburbs fell 1.1 per cent.

This may go against the conventional thinking that high-end homes would be the most affected by cooling measures and loan curbs, but RST Research director Ong Kah Seng said this was simply because their prices have already fallen drastically in previous months and there was no way to go but up.

"Buyers are finding high-end properties more affordable than before, but they are still very much concerned about weak leasing interest for high-end homes as companies tighten expatriates' housing allowances.

"This price increase in August is unlikely to be repeated in the following months . . . This is a pent-up investors' interest that is expected to be short-lived. There is still ample unsold developer stock and lacklustre leasing demand," he said.

SLP International executive director Nicholas Mak had another explanation. He believed that the figures were tilted by the greater number of transactions in the prime District 11 (Novena, Newton, Thomson) and the fact that their median "transaction over X-value" (TOX) were very positive, meaning that buyers paid higher than the properties' estimated market value.

This masked the fewer transactions in Districts 9 (Orchard Road, River Valley) and 10 (Bukit Timah, Holland, Balmoral) where units changed hands below market value.

"The minor recovery in the overall SRX price index and those of the core central region (city area) and rest of central region (city fringe) in August does not signal that the private residential price trend has reached the bottom. As some buyers wait on the sideline for prices to soften before they re-enter the market, it would result in a self-fulfilling prophecy of prices falling further," Mr Mak said.

Proof that the market remained quiet in August (also the hungry ghost month, during which it is considered inauspicious to buy property) lay in the flat resale volume. An estimated 418 non-landed private homes were resold in August, versus 417 in July.

On the leasing front, rental volume rose 3.6 per cent, with about 3,539 units rented in August. But rental prices continued to fall for the seventh straight month, slipping 0.6 per cent in August, led by the city area and suburbs which fell 2 per cent and 1.1 per cent, respectively. In contrast, rental prices in the city fringe rose a marginal 0.4 per cent.

ERA Realty key executive officer Eugene Lim said this shows that there is still demand for rented property but landlords have to price their rentals more realistically in what is now a tenant's market.

"With more projects being completed, there is an increase in the competition for tenants. Landlords have to be realistic about rents to secure tenants quickly; and very often, it would mean lowering the rent to attract or keep good quality tenants."

The weak rental market feeds into the cycle, further deterring buyers from purchasing private property for investment, he added.

Analysts continue to expect an overall drop of 4-8 per cent in the next 12 months, led by city-area condominiums.