Thursday, August 30, 2012

Suburban condos resist price pressure

Business Times: Wed, Aug 29

COMPLETED private apartments and condos (excluding small units) in the suburbs have been the best price performers year to date, according to National University of Singapore's Singapore Residential Price Index (SRPI) series.

The subindex for Non-Central Region (excluding small units) rose 1.3 per cent between December last year and July this year, based on the flash estimates for July released yesterday.

Over the same period, the subindex measuring prices of small units (up to 506 sq ft) islandwide dipped 0.1 per cent, while the subindex for Central Region (excluding small units) posted a 3.9 per cent loss, making it the worst performer.

The findings are in sync with market trends. DTZ's head of Asia Pacific research Chua Chor Hoon says that the 3.9 per cent YTD price drop for Central Region "reflects the price pressures in the region due to higher prices and an investor profile that is more concerned about global uncertainties". On the other hand, demand for suburban homes in the Non-Central Region is still buoyed by the prevailing low interest rate environment and tight job market.

The overall SRPI has declined 1.1 per cent in the year-to-date, based on the July 2012 flash estimate issued by NUS' Institute of Real Estate Studies. SRPI tracks prices of completed private apartments and condos (excluding executive condos).

For July itself, the overall index declined 1.1 per cent month-on-month, after inching up 0.1 per cent m-on-m in June.

The subindex for small units (up to 506 sq ft) islandwide rose 1.1 per cent m-on-m in July after slipping 0.9 per cent m-on-m for June.

The subindex for Central Region (excluding small units) dipped 1 per cent m-on-m in July, identical to its June performance.

The Central Region is defined as Districts 1-4 (which include the financial district and Sentosa Cove) and the traditional prime residential districts of 9, 10 and 11.

R'ST Research director Ong Kah Seng notes that "there have been some major recent launches like V on Shenton, which could have diverted some buying interest for high-end homes in the resale market". Homebuyers can opt for progress payments in developer projects, he added.

Mr Ong also notes that many high-end homes were launched in 2007 and purchased on Deferred Payment Scheme. "Hence property financing would have commenced upon project completion and various investors may feel the financing pressure as leasing has moderated with companies tightening expat allowances. Buyers who made profits from such homes may relent slightly to cash out."

The subindex for Non-Central Region (excluding small units) fell 1.3 per cent in July, reversing June's 1 per cent gain.

A DTZ report issued yesterday said the number of shoebox apartments (less than 500 sq ft) transacted fell 10 per cent from 828 units in the first quarter of this year to 748 units in Q2. These figures are based on URA Realis caveats data and cover both completed and uncompleted units.

DTZ's caveats analysis showed that the number of shoebox units sold in Outside Central Region (where suburban projects are located) declined by 34 per cent quarter on quarter while elsewhere on the island, shoebox transactions rose 36 per cent quarter on quarter. As a result, the OCR's share of islandwide shoebox transactions fell from a record high of 65 per cent in Q1 to 47 per cent in Q2.

In tandem with this trend, islandwide, the proportion of shoebox units picked up by those with HDB addresses declined to 11 per cent in Q2 from a record high of 17 per cent in Q1.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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