Thursday, April 11, 2013

Private residential resale prices up in Q1

The Business Times  |  April 11, 2013
But number of transactions falls amid government cooling measures

Resale prices of non-landed private residential properties edged up in the first quarter, despite fewer transactions taking place, data from the Singapore Real Estate Exchange (SRX) showed.

Units in the Core Central Region (CCR) rose to $1,837 psf from $1,816 psf, those in the Rest of Central Region (RCR) to $1,259 psf from $1,208 psf, and those from Outside Central Region (OCR) to $1,010 psf from $958 psf.

Mohamed Ismail, PropNex's chief executive officer, attributed the buoyant prices to excitement from buyers. "Today's interest rates are low, and if your properties are tenanted, you are in a positive cashflow position," he said.

He expects rising prices to continue as a long-term trend, owing to buyers' belief in high returns from property investment.

In March, average prices varied across regions. Prices of CCR properties fell to $1,788 psf from $1,824 psf, and those in OCR to $1,017 psf from $1,048 psf. RCR prices ticked up to $1,301 psf from $1,298 psf.

HSR CEO Patrick Liew said that it was difficult to draw conclusions about the market as a whole, saying different "pockets" could see different prices, though he expected prices to trend upwards in the long term.

While there was some upward pressure on prices, the volume of resale transactions in Q1 fell to 1,982 transactions from 3,271 the quarter before.

Mr Mohamed Ismail put this down to the cooling measures limiting supply, which he said had "changed the landscape".

"People who own property are not releasing it," he said. "If they sell, they can't buy another one, since they are subjected to Additional Buyer's Stamp Duties and so on."

Transactions recovered last month on a month-to-month basis, rising to 609 from 326.

However, DTZ CEO Ho Tian Lam said that the spike could be a seasonal increase, after the end of the Chinese New Year period.

Noting that February volumes were especially low due to a "knee-jerk reaction" to government cooling measures introduced in January, he suggested that the March rebound might reflect a market adjustment.

Despite the slowing private residential resale market, DWG CEO Dennis Wee was optimistic about sales prospects going forward.

Notably, in the shoebox segment, SRX data showed that OCR apartment rental yields fell to 4.81 per cent from 4.99 per cent in March.

In sharp contrast, rental yields for CCR and RCR shoebox units rose to 4.8 per cent and 4.4 per cent, respectively.

While OCR shoebox units still have the highest rental yields, analysts caution against rushing into such an investment.

Christine Li, head of research and consultancy at OrangeTee, said that impressions of high yields from OCR shoebox units were largely due to there being very few of such units completed, and therefore the rental market remained "untested".

Thomas Tan, executive director of RE/MAX Singapore, said that upcoming OCR shoebox developments might see further rental yield compression because of a lack of demand from tenants.

Citing data from the Urban Redevelopment Authority showing that singles and couples without children formed the bulk of shoebox unit tenants, Mr Tan said that this group was more likely to work in or around the central region.

"They would be more likely to pay a premium for accessibility," he said, adding that he expected OCR shoebox units to have their rental yields competed away by the more central ones.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

No comments:

Post a Comment