Saturday 16 June 2012

New private home sales drop 32% in May 2012: URA

1,702 units sold in May, the lowest monthly figure so far this year
By Esther Teo, The Straits Times, 16 Jun 2012

NEW private home sales here took a breather last month with only 1,702 units sold - the lowest monthly figure so far this year.

Developers held back on large new suburban launches last month after rolling out some high-profile major projects earlier in the year.

The last time sales fell more sharply was last December after the latest round of cooling measures, when sales plunged some 60 per cent to 632, from the previous month's 1,702 units.

Experts say the 32 per cent plunge last month from April's 2,496 units reduces the risk of a fresh round of cooling measures. They add that the shadow of the euro zone crisis and last month's stock market tumble have hurt buying sentiment for new homes.

When executive condominiums are included, 2,057 units were snapped up last month, compared with 2,670 units in April.

Experts say that speculation about a possible fresh round of cooling measures targeted at tiny shoebox apartments of 500 sq ft and smaller might also have spooked potential buyers.

ERA Realty key executive officer Eugene Lim pointed out that only 13 per cent of new sales last month were shoebox units, well down from the 27 per cent in the first three months of the year.

He said that after the blistering pace of sales in the previous few months, buyer fatigue might also have set in.

Experts say the slowdown in launches could also be due to developers taking time to adapt to new sales guidelines on transparency introduced last month that require developers to disclose more details about each unit.

The suburban home market led the charge again last month, making up 71 per cent of all sales.

It was sales of city fringe homes and city centre homes that fared poorly. City fringe sales fell by more than half to 362 units from April, while city centre sales fell 30 per cent to 135 units.

Compared with the 2,449 units launched for sale, the take-up rate is the lowest so far this year, but consultants pointed out this could be partly due to Eight Riversuites, which launched all its 862 units and sold fewer than 200.

Even with this plunge in sales, developers have sold an exceptional 10,880 homes in the first five months of this year - exceeding the full-year totals racked up from 2000 to 2005, and in 2008.

Mr Lim said it is unclear how sales for the rest of the year might pan out. 'The Singapore economy is still stable, unemployment and interest rates still low. As more interesting projects are launched, the pace may pick up again.'

In the light of the softening in the market and the uncertainty in the global economy, experts say that policy risks are now reduced.

Dr Chua Yang Liang, Jones Lang LaSalle's South-east Asia research head, said that despite the strong take-up of suburban homes, the weaker performance of city centre and city fringe homes means there is still unsold inventory in the market.

However, some experts say that benchmark prices set at certain projects are worth keeping a close eye on.

International Property Advisor chief executive Ku Swee Yong pointed out that suburban project The Seahill on West Coast Drive achieved a price of $1,759 per sq ft (psf), a benchmark price for the area, with 29 sales transacting at above $1,500 psf. The Hillier on Hillview Avenue also achieved a high of $1,720 psf.

The top selling project was Flo Residence, with 266 units sold at a median price of $863 psf.

Cooling measures loom as resale home prices rise
By Esther Teo, The Straits Times, 9 Jun 2012

BOTH private and public resale homes have attracted higher prices in the past two months, a report has shown, stoking concerns that more cooling measures might be on the cards.

Preliminary data collated by major property agencies in Singapore found that the average price for all private non-landed resale transactions in April and May was $1,131 per sq ft (psf).

This uptick comes after average prices dipped from $1,072 psf in the fourth quarter last year to $1,051 psf in the first three months of the year, according to data from the Singapore Real Estate Exchange (SRX).

Resale volumes have also recovered after a poor first quarter and are set to post their best showing in a year, SRX said in its monthly report released yesterday.

Buyers could be flocking to the resale market because prices are more attractive than for new homes, consultants said.

Median prices for resale Housing Board (HDB) flats also rose by 2 per cent from the quarter before, with Bukit Panjang lodging the highest gain of 7.6 per cent.

SRX collates transactions by major property agencies, accounting for about 85 per cent of resale deals in the market.

Consultants note that while a rebound in the resale market might set some alarm bells ringing, more time is needed to determine if the trend is a sustained one.

The unfolding euro zone crisis must also be taken into account.

OrangeTee research and consultancy head Tan Kok Keong said: 'External conditions are quite bad so measures, if any, are likely to be less harsh... It is better to wait till the end of the quarter at least to get a clearer idea of where the market is headed.'

Official data for the second quarter will be out next month.

Tiny 'shoebox', big questions
Shoebox units fuel property market frenzy - but these buyers face risks
By Goh Eng Yeow, The Straits Times, 11 Jun 2012

THE headline numbers could not have painted a rosier picture: New private home sales in April climbed to a three-year high of 2,487 units.

But take a look at the stock market, and the lacklustre performance of the property counters does not reflect the same confidence as shown by home hunters in their buying frenzy.

This is unlike previous property market rallies, which inevitably triggered a sharp run-up in listed real estate developers' shares.

Sure, the deepening gloom in the world's financial market plays a part in dampening investors' appetite for equities. There is also the risk of further measures by the Government to remove the froth that may be forming in the property market.

But one can also argue that property counters make ideal safe havens for risk-averse investors to park their nest eggs, given the buoyant sales they are enjoying.

So why is it that the shares of listed property developers are not getting any positive re-rating from investors in their current flight to safety?

Maybank Kim Eng analyst Wilson Liew observed in a May 16 report that the exuberance in the residential property market is mainly confined to the mass market, where 'shoebox' units that have areas of 550 sq ft or less are being eagerly snapped up.

In contrast, sales in upmarket condos have stayed subdued, while the resale property market is fairly quiet.

This could be due to the 'affordability' factor, according to Citi Investment Research analyst Wendy Koh, who estimated that about half of the shoebox unit buyers had been HDB heartlanders.

As she observed, prices have shot up by 30 per cent in the past three years, yet heartlanders can still afford to buy shoebox units as they are priced below $1 million because the size of the units have shrunk below 600 sq ft.

While the stock market and residential market are very different in nature, what is interesting is that similar 'affordability' arguments have been used in touting the merits of buying penny stocks and shoebox units.

The intended audience is also broadly similar - the average HDB heartlander with some cash to spare.

This has led to a belief among some stock market strategists that heartlanders may have forsaken the stock market to make big wagers on shoebox units, lured by the ultra-low mortgage rate of 1 per cent.

Buying a new apartment offers another benefit: The buyer incurs only a small monthly cash out- lay after making his initial downpayment. This essentially gives him a long-dated purchase option, as he waits for his condo to be built.

If he then sells it when the unit gets its temporary occupation permit (TOP), this works to his advantage, since the Government now levies a stamp duty on a sliding scale on homes sold within four years of purchase.

But therein lies the concern: The penny stock rally always ends in grief once the liquidity is removed. This raises the question as to whether a similar fate awaits a shoebox unit buyer, if interest rates are jacked up sharply.

There is another observation at recent property launches worth highlighting - the slow pick-up in new condo sales after the initial buying frenzy.

Daiwa analyst Tony Darwell said: 'While the initial weekend launch sales have been firm with take-up rates of between 25 and 30 per cent, sales slow down significantly after that.'

This has caused the total inventory of unsold units to jump to 13,167 units in April, from 12,833 units as at the end of last year.

The worry about this inventory accumulation is that it may escalate into a huge oversupply of condos as more of them, built on Government Land Sales sites, are launched.

The redeeming grace is that so far, the resale market seems to be holding up well. There were 2,551 resale non-landed transactions in April and last month. This is already higher than the 2,117 units sold in the first three months of the year.

But analysts have noted that while the appetite is still good for condos whose sizes are 1,000 sq ft or more, the popularity of shoebox units in the resale market is untested, even though the supply is expected to grow from the current 2,500 units to about 9,700 by 2015.

This raises another question, as to whether the market can absorb the large number of resale transactions that may emerge when the units sold now get their TOPs a few years down the road.

There is also no guarantee that they can be rented out as this will depend on the economic climate and employment conditions then.

Of course, some will argue that the Government can try to stir up housing demand by removing some of the curbs it has put in place, like the additional stamp duties levied on residential property purchases by foreign buyers.

But unless the global economic picture improves dramatically by then, the world's would-be property buyers will be spoilt for choice.

It may explain why investors are steering clear of buying property counters, unless the exuberance witnessed in shoebox units is repeated in the rest of the real estate market.

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