Thursday, June 21, 2012

Suburban private home values outpace city prices

Straits Times: Tue, Jun 19
PRICES of non-landed suburban private homes have outperformed those in the city over the last five years, a new report has found.

Across the board, private home prices have soared more than 50 per cent over the five years.

But not all segments have been buoyed equally by this price jump, Square Foot Research said.

City centre homes have fared the worst, with many posh homes struggling to match robust gains posted by homes on the city fringe and in suburban areas.

The property research firm, set up by a former stock analyst, compared the change in prices between the first quarter of 2007 and the first quarter of this year.

The results showed that prices of non-landed homes in suburban areas enjoyed price rises of 68 per cent on average. This was a startling 30 percentage points more than city centre home price rises of 38 per cent, on average.

Driving the point home, the top five price performers in the period were all suburban projects.

And the bottom five were high-end homes, mostly in the prime districts of 9, 10 and 11.

St Regis Residences in Tanglin Road even registered a sharp 16 per cent drop in value and was the worst performer in the period.

While average selling prices were $2,671 per sq ft (psf) in the first three months of 2007, St Regis Residences units were languishing at an average of $2,237 psf five years later.

Second-worst was Waterford Residence in Kim Yam Road which enjoyed only 6.5 per cent gains in capital values.

At the other end of the spectrum, Sherwood Tower within Bukit Timah Plaza led the pack in terms of gains, posting a staggering 175 per cent jump in average prices from $258 psf to $709 psf.

While the high-end segment may have been a laggard in the past five years, Square Foot Research director Ooi Yi Tung said, the mass-market rally has given that segment a new price support. It is also more attractive in terms of value for money.

'Supply in the high-end segment is limited. The subdued en-bloc market helps limit the supply to just what it is today,' Mr Ooi added. 'The mass market, on the other hand, is being inflated with new supply from the Government Land Sales programme.'

But other experts pointed out that if a different period had been selected, the trend would have been reversed with non-landed city centre homes posting some of the strongest price rises instead.

For instance, they enjoyed solid price gains of about 69 per cent in the three-year period from the first quarter of 2005 to the first quarter of 2008.

Prices of city fringe homes jumped 39 per cent while suburban homes trailed with a 38 per cent rise in the same period.

International Property Advisor chief executive Ku Swee Yong noted that the collective sale market for high-end developments boomed in 2007, lifting city centre prices then while the suburban market was still quiet.

This led to a high-base effect, he added, which when coupled with the lacklustre performance of the market over the past two years, leaves the high-end segment trailing far behind.

SLP International research head Nicholas Mak noted that there was a lot of hype when projects like St Regis and One Shenton were launched in 2006 and 2007, which could explain their higher pricing then.

'But fortunes can be reversed. There was a time when it would be unimaginable for high-end properties to be the worst performers. We might just come to another stage in five to seven years when it becomes the time of the high-end market again. Mass- market homes, which have seen their prices run up by too much in the past few years, might see their prices stall instead,' he said...
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