Tuesday, April 26, 2011

Home prices, sales cool in first quarter

Straits Times: Tue, Apr 26
THE housing market kept applying the brakes in the first quarter, as both public and private homes recorded smaller price rises compared with the previous quarter.


Sales volumes also dropped: Buyers picked up 4 per cent fewer Housing Board resale flats and 20 per cent fewer private homes, according to new data yesterday.


In another sign of slower activity, the cash premiums that buyers paid for HDB flats fell as well. The median cash over valuation (COV) fell by $2,000 to $21,000 in the first quarter from $23,000 in the previous quarter, HDB said.


Property analysts attributed these figures to the Government's latest - and toughest - round of cooling measures in January.


HDB resale flat prices rose 1.6 per cent in the first quarter, down from 2.5 per cent in the previous three months, HDB said yesterday.


Private home prices rose 2.2 per cent in the first quarter, lower than the 2.7 per cent gain in the fourth quarter of last year, said the Urban Redevelopment Authority (URA).


But this figure was slightly higher than the previous estimate of a 2.1 per cent rise, implying prices rose in the last weeks of March.


With take-up still strong for new projects last week, there is a chance that the Government may implement a new round of cooling measures after the May 7 General Election, said Standard Chartered analyst Regina Lim. These could include raising the down payment for home purchases, she added.


'We think the Government has refrained from using these measures thus far as they would hurt affordability for first-time home buyers and affect votes in the election,' Ms Lim said in a note.


There are other signs that the demand for homes remains robust, especially in the lower tiers of the market.


Suburban home prices climbed 3.1 per cent in the first quarter, accelerating from a 2.1 per cent rise in the fourth quarter of last year, the URA said yesterday.


The prices of condominium units in city fringe areas also rose by 2 per cent, after advancing 1.9 per cent in the previous three months.


This could be because the cooling measures are forcing home buyers to turn to more affordable mass-market housing, said Colliers International director of research and advisory Chia Siew Chuin.


As for the HDB market, COV levels appear to have rebounded from the first quarter, said property agencies PropNex and ERA. Both said the median COV for flats sold so far this month is back up to $23,000.


But while PropNex said their COVs have risen across all flat types, ERA has observed sharp increases in COVs especially for five-room and executive flats.


Demand is boosted by two sources: HDB dwellers who have given up on upgrading to pricey private homes and are moving to bigger flats instead, and private home owners who are cashing out and moving to HDB flats, said ERA Realty key executive officer Eugene Lim.


'One of my agents recently said someone bought a rare Pasir Ris executive apartment for $95,000 COV,' he said. 'So it's not because the market has bounced back and the cooling measures are not working, but we feel certain types of flats are lifting the market.'


Some analysts yesterday also warned of possible oversupply in 2013 and 2014, when the spate of new projects is completed.


With more supply, private home rents have eased, said Mr Sai Min Chow, a Nomura property analyst. Rents rose 1.2 per cent in the first quarter, down from 2.6 per cent in the previous quarter.


But Knight Frank's head of consultancy and research, Mr Png Poh Soon, believes the greater supply of homes will be balanced by the fact that more foreigners are being drawn to Singapore.


'We've always talked about private home sales averaging 6,000 to 8,000 a year, but 10,000 to 12,000 may be the new norm,' he said.


He expects private home prices to rise by 5 per cent to 10 per cent this year. But Mr Sai thinks luxury home prices will fall by up to 8 per cent and the rest of the market will stay flat.


fiochan@sph.com.sg


Sales volumes also dropped: Buyers picked up 4 per cent fewer Housing Board resale flats and 20 per cent fewer private homes, according to new data yesterday.

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