Thursday, June 21, 2012

Buyers return 150 private homes in May

Straits Times: Wed, Jun 20
PRIVATE home buyers returned 150 units to developers last month at projects such as Sky Habitat, The Tampines Trilliant and Hillsta - the highest number in at least five years.

These units, bought in April, made up 5.7 per cent of the more than 2,600 non-landed homes, including executive condominiums (ECs), sold that month, analysis by property research firm Square Foot Research shows.

Despite the high absolute figure for returns, experts say that in percentage terms, the rate is in line with last year's.

They add that the spike in absolute numbers is largely due to April's robust sales which had buyers snapping up the most number of units in almost three years.

Return rates are defined as returned units as a percentage of total non-landed sales in the previous month.

These rates have remained largely below 6 per cent, the property research firm's data shows.

Home buyers sign an option typically lasting three weeks and can back out during this period.

But those choosing not to exercise their options forfeit 1.25 per cent of the price. This works out to $12,500 for a $1 million condo.

Square Foot Research director Ooi Yi Tung noted that some buyers might also have been spooked by National Development Minister Khaw Boon Wan's comments last month that the Government is monitoring the trend of shoebox units and would consider additional regulations, if necessary.

'Speculation that another round of measures, likely targeting shoebox units, is imminent might have caused some of these buyers to pull out,' he added.

Shoebox units, smaller than 50 sq m each, formed about 20 per cent of the 2,496 non-EC units sold last month.

While the 150 returned units represent a five-year high in terms of absolute numbers, the percentage return rate was higher in the earlier part of the year.

For instance, while 52 units were returned in January, that translated to a return rate of 9 per cent. This may have been caused by the tough round of cooling measures unveiled last December.

However, the record is still that set in February 2008; the rate was a staggering 41 per cent, with 127 units returned out of about 310 non-landed units sold, as concerns over the United States economy and choppy stock markets hit sentiment.

Mr Ooi added that the actual number of returned units each month could be higher. This is because options are valid for three weeks and there could be cases where options are issued but declined within the same month.

Last month, 15 units were returned at Hillsta in Choa Chu Kang's Phoenix Road, 11 units at EC project The Tampines Trilliant and 10 at Sky Habitat in Bishan.

In April, buyers returned 17 units at Riversound Residence in Punggol and nine each at Ripple Bay in Pasir Ris and at EC project Twin Waterfalls in Punggol.

Dennis Wee Group's senior manager of research and consultancy Lee Sze Teck said buyers might return units if they find more attractive options elsewhere or have simply changed their minds.

Buying sentiment is still healthy and positive, he noted, and if the local economy is doing well and jobs are still secure, then despite the shadow of the euro zone crisis, buyers might still keep their purchased units...
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