Monday, May 13, 2013

Home resales: What a difference a year makes

The Business Times  | M AY 11, 2013
Non-landed home resales plunge 53.9% year-on-year in April; last month also sees 0.4% drop in prices from March

RESALE volumes of private homes have continued their downward trajectory, even as prices island-wide continued to soften.

A total of 572 resale non-landed homes changed hands last month, going by flash figures released by the Singapore Real Estate Exchange yesterday. While comparable to March's 614 units sold, this is a 53.9 per cent drop from the 1,240 transactions recorded in April last year.

DTZ's head of Singapore research Lee Lay Keng suggested that the fall in demand could have come from a mismatch in the expectations of buyers and sellers.

"Singaporeans who already own two or more properties will now have to pay an an additional buyer's stamp duty (ABSD) of 7 per cent or 10 per cent if they were to purchase another property after selling their secondary properties.

"As the replacement cost of selling their properties is now higher, sellers may require a higher price before they will sell their properties, or they may choose to withdraw their properties from the market.

"On the other hand, prospective buyers are waiting to see if prices will fall first before entering the market again."

The impact on prices was more muted however; prices dipped just 0.4 per cent from the previous month.

Price drops for condos in the city centre (Core Central Region or CCR) and city fringe (Rest of Central Region or RCR) fell a little more - by 1.9 per cent over the previous month to $1,772 and $1,267 per square foot (psf) respectively.

This is the fourth consecutive monthly price drop, representing a drop of 8.2 per cent, for CCR since its price peaked last December at $1,931 psf.

Prices of mass-market condos bucked the trend however, posting a 1.0 per cent rise in prices to $1,022 psf in April.

This is unsurprising, given the still pent-up demand from first-time buyers for mass-market homes, supported by low unemployment rates and interest rates, said Eugene Lim, key executive officer at ERA Realty Network.

That being said, demand for resale condos is expected to slow in the coming quarters.

Mr Lim said: "Combining the cooling measures introduced in January and increasing supply, demand is anticipated to slow down, taking into account that pent-up demand is gradually being met.

"Buyers are more interested in new sales, and they are buying for investment and capital appreciation."

Separately, overall rental prices slipped 1.0 per cent in April. Rental prices fell by by 4.4 per cent in RCR and by 0.9 per cent in Outside Central Region (OCR) areas; in CCR, rents picked up 2.1 per cent to $4.79 psf.

Rental yields softened in both RCR and OCR, while yields in CCR continued their climb to reach 3.25 per cent. Despite yields softening, RCR still showed the highest gross yield of 3.73 per cent as at April, followed by OCR's 3.68 per cent.

Mr Lim, looking ahead, said rents may soften further as more projects are completed, and as the tightened quota on foreign workers kicks in, leading to fewer of them coming here and needing accommodation.

Further, given that the supply of suburban homes has significantly increased, this will keep suburban rental prices down, he said.

On the public housing front, cash-over-valuation (COV) for resale flats dropped $1,000 to $30,000, the lowest monthly COV since September 2012. Despite this, median resale prices continued trending upwards, hitting $465,000, up 1.1 per cent from $460,000 in March.

ERA's Mr Lim said: "With COVs falling, more home-buyers may be enticed to enter the HDB resale market, as second-time home-buyers will find it more affordable and they need not endure the long wait and numerous unsuccessful ballots for Built-To-Order (BTO) units."

Resale transactions remained stable at 1,271 flats sold, versus March's 1,355 transactions.

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

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

No comments:

Post a Comment