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Thread: Speculation in private homes hits highest rate in 7 years

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    Default Speculation in private homes hits highest rate in 7 years

    Jan 22, 2007

    Speculation in private homes hits highest rate in 7 years

    Sales of unfinished units still well below the market's peak in mid-1990s

    By Fiona Chan

    RISING VOLUME AND PRICES: While Icon (above) in Tanjong Pagar kept its joint top spot on the sub-sales list, other projects such as The Centris in Jurong also emerged as popular locations.

    SPECULATIVE activity in private homes picked up pace towards the end of last year to hit its highest quarterly rate in seven years.

    There were 354 uncompleted homes that changed hands in the last three months of last year, according to new data by property consultancy CB Richard Ellis (CBRE).

    Such transactions, known as sub-sales, are used as a measure of speculative activity in the private home market.

    The number of sub-sales last quarter rose about 50 per cent from the third quarter and is the highest since 1999.

    And not only are more uncompleted homes changing hands now, but such homes have also become more expensive in the process.

    The median price of sub-sales hit an all-time high of $1,034 per sq ft (psf) in the fourth quarter.

    This was up from $995 psf in the third quarter, which was itself a record price.

    For the whole of last year, 914 sub-sales took place, according to CBRE's analysis of home caveats lodged with the Urban Redevelopment Authority. This is more than double the 402 sub-sales for the whole of 2005.

    The pace of sub-sales also seems to be accelerating, with about 40 per cent of the sub-sales last year taking place in the last quarter alone.

    The steady climb in prices also bears evidence to the quickening pace of sub-sales.

    Sub-sale prices started out at $608 psf in the first quarter, and rose to $774 psf in the second quarter.

    After that, prices jumped sharply in the second half of the year, to $995 psf in the third quarter and $1,034 psf in the last quarter.

    Interestingly, speculative activity last year was not limited to high-end and niche homes, for which demand and prices have spiked.

    Although The Sail @ Marina Bay and Icon at Tanjong Pagar kept their positions as the developments with the highest number of sub-sales, other projects emerged as unexpected hot properties.

    These were Twin Regency, a mid-end condominium in Tiong Bahru, and The Centris, a 99-year leasehold, entry-level project in Jurong.

    However, despite the resurgence of speculative deals, CBRE was quick to emphasise that the current level of speculation still remains well below the flipping frenzy during the property market boom of the mid-1990s.

    Mr Li Hiaw Ho, executive director at CBRE Research, noted that there were more than 3,000 sub-sales a year in 1995 and 1996.

    'It can be inferred that the level of sub-sales in 2006 is still a far cry from the scenarios in 1995-1996, and hence (there is) no cause for alarm,' he said.

    But Mr Li added that he expects the sub-sale market to continue to remain active, 'particularly for good quality projects'.

    'Whether or not the pace of sub-sales will increase further depends on the price of projects and when it will hit the resistance level,' he said.

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    Last edited by mr funny; 22nd January 2007 at 12:12 PM.

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