Friday, April 27, 2012

Private home resales spring back to life

Business Times: Thu, Apr 26
[SINGAPORE] After going into deep freeze since the additional buyer's stamp duty (ABSD) was introduced on Dec 8, resale transactions of completed private homes snapped back to life in March. The recovery was partly disguised amid the first quarter figures, weighed down by dismal volumes in January and February.

In fact, Savills Singapore's analysis shows that resale volumes for March have recovered to levels seen before the ABSD kicked in. The turnaround was sudden, as the resale market had remained jittery even while buyers were returning to property launches in the first two months of the year.

However, since March, agents say that some of the eye-popping per square foot (psf) prices achieved at new launches have helped to jumpstart interest in the secondary market for completed properties, where prices look more attractive.

Savills' analysis of URA Realis caveats data shows 1,142 resale deals for private homes (excluding ECs and en bloc sales) done in March - double the 565 caveats for February and more than three times January's volume of 314 transactions. The March number also exceeds December's volume of 776 and November's 981.

"Given that the average monthly resale volume for 2011 was 1,166 transactions, the March numbers show that resale volumes have recovered back to pre-ABSD levels," said Savills Singapore research head Alan Cheong.

The March 2012 resale volume is still 23 per cent below the 1,480 caveats lodged in March 2011.

The final tally for March 2012 could rise as more caveats stream in over the next few weeks. Savills' analysis, based on caveats captured by URA Realis as at April 24, also showed 332 resale transactions being done so far this month.

Savills commented: "The pace of resales in April is still healthy. Agents are still conducting frequent viewings and enquiries. Barring any new property cooling measures or external shocks, resales should remain robust for the next few months - given the current low interest rate environment, liquidity and increasing population scenario, among other factors."

The weak performance in the first two months dragged down the volume of resale deals of private homes for Q1 this year to 2,021, a decline of nearly 25 per cent from 2,688 in the preceding quarter and a year-on-year drop of 42.3 per cent from 3,503 units in Q1 2011.

"When the ABSD was imposed on Dec 8, 2011, new home sales practically froze in the following weeks. Subsequent to the successful launch of Watertown and Parc Rosewood in January, resale buyers took a while to fully absorb the fact that the property market still has legs. Only in March did they put pen to paper," said Mr Cheong.

Agents report that high prices achieved for 99-year leasehold suburban launches like Watertown in Punggol (with median prices of about $1,340 psf in February and March) and Sky Habitat in Bishan, which marked a new record for the suburban condo market based on an average price said to be about $1,650 psf after taking into account the initial 3 per cent discount given to all buyers - have helped to stir interest in the resale market and in projects launched earlier that are still being marketed by developers.

Archipelago, a five-storey, 99-year condo facing Bedok Reservoir Park, is going at about $1,000 psf on average.

Compared to Sky Habitat, resale prices for some completed freehold properties in the prime districts would appear attractive to some buyers, say agents. For example, a 990 sq ft ground floor unit at One Jervois changed hands for $1,515 psf (reflecting an absolute price of $1.5 million) in March, while a 947 sq ft unit on the third floor of Jervois Regency sold for $1,361 psf (about $1.29 million) in April.

A 12th floor unit of 2,250 sq ft at Residences@ Evelyn changed hands at $1,609 psf in March, while a 2,508-sq ft fourth floor unit at Chelsea Gardens at Walshe Road sold for $3.8 million, which works out to $1,515 psf.

David Neubronner, director of residential project sales, Jones Lang LaSalle, said: "Completed freehold properties at Meyer Road and in Districts 10 and 11 priced at $1,500-1,600 psf represent good values for owner occupiers."

Although psf prices are higher for new launches, absolute price quantums are generally bigger for older completed projects as units are mostly larger.

"Buyers of resale properties may be a different group than those buying in the primary market; they could be better heeled," suggests an agent.

Credo Real Estate executive director (residential) Manjit Gill says the company has seen an increase in enquiries and requests for viewings of completed properties in the resale market, particularly those in the vicinity of new launches.

"While psf prices are lower in the resale market, buyers would have to make full payment of the purchase price upon completion of sale (usually in three months) whereas if they buy a unit from a developer in a newly launched project, progress payments can stretch over the three years or more that it takes to complete the project," he adds. Lower psf prices in the resale market may also be due to the age of the project and its facilities.

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Martin Koh/ Sherry Tang
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