Strong buying momentum of private homes continues in Q2

Source : Channel NewsAsia – 3 Jul 2009

Property consultancy DTZ said strong buying momentum of private homes in Singapore has carried on into the second quarter this year.

In its latest Singapore Property Market Report, DTZ estimated that sales in the primary market came up to between 6,700 and 6,900 units from January to June, surpassing the 4,264 units sold for the whole of last year.

As such, the firm is forecasting that this year’s sales are likely to exceed 2006’s level of 11,147 units.

DTZ also added that the secondary market picked up considerably in terms of transaction volume, with more foreigners buying as well.

The proportion of foreign buyers increased from 5 per cent in the first quarter to 8 per cent in April and May alone.

Amidst the buying frenzy, private resale home prices also increased in the second quarter. Homes in prime districts registered higher growth than those in suburban areas.

Average prices of freehold non-landed resale private homes in the prime districts of 9, 10 and 11 rose 11.3 per cent to S$1,247 per square foot.

Outside the prime districts, average prices of leasehold resale homes increased 3.2 per cent to S$573 per square foot.

The leasing market continued to see decline in rental values, but at a slower pace than the preceding quarter.

Average rental values of homes in prime districts fell 9.1 per cent to S$3.30 per square foot per month, following a 16.2 per cent fall in the previous quarter.

As for retail rents, DTZ said they continued their downward slide in the second quarter this year.

Prime first-storey rents in the city, excluding the Orchard and Scotts Road areas, fell by 3.1 per cent in the second quarter to S$25.40 per square foot per month. The drop was more than the previous quarter’s fall of 2.2 per cent.

In the Orchard and Scotts Road areas, rental falls were more moderate – down by 0.8 per cent to S$39.60 per square foot per month. This is better than the 4.8 per cent decline seen in the previous quarter.

Supported by local resident catchment, rents in suburban areas fell only marginally by 0.6 per cent, unchanged from the previous quarter.

Since its peak in 2008, prime retail rents in the Orchard and Scotts Road areas dropped 6.8 per cent. Those in other parts of the city fell by 6.3 per cent, while those in the suburban areas saw milder declines of 2.1 per cent.

DTZ attributed the drop in prices to new supply coming on stream and the ongoing economic contraction. It added that the H1N1 flu pandemic will be a threat to retail sales and dampen a strong recovery in the retail sector.