Rise in private, HDB resale transactions in Q2 2012

Straits Times: Sat, Jul 28

MORE buyers have snapped up resale Housing Board flats and condo units in the second quarter even as prices have reached record highs. Experts said this marks a reversal in the resale market that had seen a downward trend in transaction volume in previous quarters. They added that reasons ranged from pent-up demand, to lower cash premiums asked by sellers of HDB flats. On the private-property front, the 3,487 resale transactions in the second quarter, up from 2,206 in the first, represented a rise of close to 60per cent. HDB resale deals rose 19 per cent to 7,011 from 5,892. PropNex chief executive Mohamed Ismail said the wait- and-see attitude adopted by buyers due to the Government's cooling measures - including the additional buyers stamp duty - seems to have dissipated. 'It appears that the strength of property demand has outweighed concerns over the slowing economy, the worrying global economic situation and the dampening effect of multiple rounds of government measures,' he said. ERA Realty key executive officer Eugene Lim noted that buyers who are not going for expensive, new, top-end condo units in the suburban areas are instead turning to the core central area and 'finding good bargains'. Citing an example, he said an 800sqft apartment at the 99-year-leasehold Watertown in Punggol recently sold for $1.1 million. By comparison, a similar-sized apartment at the freehold Levelz in Farrer Road went for about $1.2 million. There were 701 transactions in the city centre in the second quarter, compared to 376 in the first. Private non-landed home prices in the city centre and city fringe inched up 0.6 per cent and 0.4 per cent respectively, reversing a dip of 0.6 per cent in both segments in the previous quarter. In suburban areas, it rose 0.5 per cent, down from a 1.1 per cent gain. Overall, private homes increased by 0.4 per cent, compared to a decrease of 0.1 per cent in the previous quarter. HDB resale flat prices inched up 1.3 per cent - a quicker pace than the 0.6 per cent in the first quarter. On the greater number of HDB resale deals, Mr Lee Sze Teck of Dennis Wee Group linked this to the steep plunge in COVs this year. COVs are cash premiums paid above a flat's valuation. Based on data from various agencies, the estimated overall COV median is $26,000 so far this year, compared to about $34,000 in the fourth quarter of last year. 'Buyers could have also returned to the resale market after failing to land their ideal home in the new flat launches this year,' he added. The HDB has said it is on track to offer 25,000 new flats this year. Mr Lim said those opting to buy resale flats also do not need to wait three years for new flats to be built. 'And if they are second-timers, it might be more worth their while to pay the COV than the resale levy,' he added. The resale levy that a buyer going for his second subsidised flat must pay ranges from $15,000 to $50,000. It was this which made 39-year-old researcher Damien Seng go for a resale unit. 'Moving immediately to a new place is more practical than trying my luck with new flat launches,' he said. Despite the flurry of resale activity, experts are predicting that growth will be gradual for both the HDB and private segments, in part due to the big supply of new homes in the pipeline. [e-mail] MORE PROPERTY REPORTS: MONEY Source: The Straits Times Private home buyers lured by attractive resale deals Business Times: Sat, Jul 28 PROPERTY buyers have been wising up to more attractive deals for private homes in the secondary market compared with pricey launches by developers of late. Latest government figures show a 58 per cent or 1,281-unit quarter-on-quarter increase in resales or secondary market transactions of completed private homes to 3,487 units in Q2, which made up for a decline of 17.2 per cent or 1,124 units in developer sales to 5,402 units from the record Q1 volume of 6,526 units. The stronger resale demand probably led to prices of completed non-landed private homes faring better than uncompleted ones in Q2. Urban Redevelopment Authority's Q2 numbers also threw up what could be an early sign of buyer-fatigue setting in for shoebox apartments. The number of small-format units (up to 50 sq metres/538 sq ft) sold by developers tumbled from 1,764 in Q1 to 1,038 in Q2. Their share of the total number of private homes sold by developers also slipped from 27 per cent to 19 per cent. DTZ' Southeast Asia chief operating officer, Ong Choon Fah, said: "As quite a number of people have already bought small apartments, demand may be starting to satiate for this segment. But the lower sales of small-format units in Q2 could also be a function of launches; developers may have minted fewer such units in Q2," said Mrs Ong. Developers' sales of units priced up to $750,000 halved, from 2,766 in Q1 to 1,435 in April-June this year. As a result, the share of such units among total developer sales also slid from 42 per cent to 27 per cent. ERA Realty Network key executive officer Eugene Lim said: "With new homes selling at higher prices, the supply of units below $750,000 is decreasing." Market watchers also note that the authorities have highlighted potential pitfalls of investing in small-format units - for example, the substantial supply of these units and that their rental yields could decline as more such units are completed. At the same time, some agents have also put the spotlight on sweet deals available in completed projects vis-a-vis new launches and this could have diverted some house hunters to the secondary market. "Bargain hunters have been combing the resale market for the possibility of buying a property in Core Central Region (CCR) at almost the same price as new homes sold in the Outside Central Region (OCR)," notes Mr Lim. CCR includes Singapore's choicest residential districts; OCR refers to suburban locations where mass-market condos are located. "In general, across all regions, as the sellers are individuals rather than developers, it's quite possible to get good deals that may be cheaper or comparable to new home sale prices. Even so, these sellers would be making a profit," said Mr Lim. Said DTZ's Mrs Ong: "Prices of new launches these days are higher than existing projects in the vicinity and people are starting to see value in these older projects." Quarter-on-quarter, resale volume rose 86 per cent to 701 units in Q2 for CCR and by 54 per cent to 1,751 units in OCR. In Rest of Central Region (RCR), the increase was 50 per cent to 1,035 units. Such strong demand has helped to firm prices for completed homes, as demonstrated in URA's non-landed private home price indices in all three regions. In CCR, the price index for completed properties rose 2.2 per cent Q-on-Q in the second quarter, against a 0.6 per cent price dip for uncompleted properties. In both RCR and OCR, completed properties posted a 0.9 per cent price rise, surpassing a 0.1 per cent gain for uncompleted properties. Sales momentum also picked up in Q2 for subsales - which are also secondary market transactions but involve projects that have yet to be completed; hence they are often seen as a gauge of speculative activity. Though the number of subsales rose from 446 units in Q1 to 600 in Q2, most property consultants are not alarmed. They suggest the increase could have emanated from those who bought properties around 2008/2009 exiting their investment as the projects near completion. With a punitive seller's stamp duty regime in place since January 2011 to deter short-term trading of private homes, most observers don't rate the risk of another flare-up in speculative activity as high. In all, developers have sold 11,928 private homes excluding executive condos (a public-private housing hybrid) in first-half 2012 - or 75 per cent of the 15,904 units they sold in the whole of 2011. Analysts predict a full-year 2012 tally of 18,000-22,000, surpassing 2010's record of 16,292 units. With the government continuing to roll out substantial land sales in the face of strong demand for private residential properties fuelled by low-interest rates and property's draw as a hedge against inflation, some industry players expect prices to be flat in the second half. "If economic conditions worsen, we could see see some price softening next year," says Credo Real Estate executive director Ong Teck Hui. URA's benchmark private home price index rose 0.4 per cent Q-on-Q in the second quarter, after declining 0.1 per cent in Q1. Foreigners (excluding Singapore permanent residents) picked up 8.3 per cent or 442 of the 5,313 uncompleted private homes developers sold in Q2 - up from 402 units and a 6.2 per cent share in Q1. The Q1 numbers marked a steep fall from foreigners' 17 per cent (or 601 units) share of developers' Q4 2011 sales. Foreign buyers thinned after last December's introduction of the 10 per cent additional buyer's stamp duty on their residential property purchases here. An industry player said the Q2 pick-up in foreign buying was due to developers bringing projects overseas, with some offering incentives like stamp duty absorption. "But some foreign buyers may be deterred from the messages that foreigners are no longer so welcome in Singapore. So they're asking: "Why should we invest here?" " URA's private residential rental index rose 0.3 per cent Q-on-Q in the second quarter, matching Q1's gain. Its office and shop rental indices, however, dipped 0.5 per cent and 0.3 per cent in Q2. In the industrial segment, rentals rose 4 per cent for flatted factories but dipped 2 per cent for flatted warehouses. However, the All-Industrial property price index galloped at a faster pace of 8.4 per cent in Q2 compared with Q1's 7.3 per cent rise, which some analysts attribute to keen interest in strata industrial properties. URA's spokesperson said that from Q2 2012 onwards the authority has worked with other government agencies to obtain more information on floor area of new industrial units transacted and thus has been able to include these transactions in the computation of its industrial property price index. Source: Business Times