Median home prices in Q3 jump smartly

Source : Business Times – 17 Sep 2009

CBRE analysis shows sharp climb but it expects sales and prices to moderate

The median price per square foot for new 99-year leasehold condos and apartments sold by developers rose 16.5 per cent in Q3 over Q2 – more than double the 7.8 per cent quarter-on-quarter increase seen in Q2, according to CB Richard Ellis’s analysis of caveats data.

Its study was based on caveats data downloaded from URA’s Realis system on Sept 15 this year.

‘Prices of new projects are always a function of new launches. We have seen the launch of some high quality projects with good attributes such as those near MRT stations in the past three months,’ said CBRE’s executive director (residential) Joseph Tan.

The study showed pretty much across-the-board increases in median psf prices so far this quarter compared with Q2 – in primary and secondary markets, and for 99-year leasehold as well as freehold/999- year leasehold tenure properties.

National Development Minister Mah Bow Tan told Parliament on Monday that ‘overall private housing prices have started to increase significantly since June’. He said this while announcing measures to cool the overheating of the property market.

The government has scrapped the interest absorption scheme and will restart confirmed list land sales in the first half of 2010. It will also enhance supply in the reserve list for H1 2010 to meet possible increase in demand.

For freehold and 999-year leasehold non- landed private homes, the median price of units sold by developers appreciated 30.8 per cent to $1,241 psf in this quarter over the preceding quarter, after posting a 9.7 per cent quarter-on-quarter decline in Q2, according to CBRE.

In addition to listing median psf prices, the property consulting group also analysed median price in terms of quantum per unit. The figure for 99-year non-landed private homes sold by developers rose 11 per cent from $824,967 in Q2 to $916,000 in Q3.

Making a general comment on the direction of private home prices, CBRE said that ‘further price increases will be checked because they had climbed substantially in the past six months and some resistance can be expected’.

Deutsche Bank, in a research note issued after Monday’s announcement, said that developers have been raising prices by 2 to 6 per cent month-on- month across all segments since private residential prices bottomed out in February/March this year.

‘And in the secondary market, prices for some of the projects we track have increased by around 10-40 per cent from recent lows,’ added the report, written by strategist Gregory Lui and analyst Elaine Khoo.

CBRE said yesterday that sales momentum in the fourth quarter is likely to moderate following this week’s measures to stabilise the property market and with fewer launches of large-scale projects on the cards.

It reckons developers will sell about 5,200 private homes in Q3, which would bring the tally for the first nine months of 2009 to 12,450 units. Primary market home sales should exceed 14,000 units for the whole of this year, with a possibility of surpassing the record 14,811 units in 2007.

HDB upgraders bought 51 per cent of new private homes sold by developers in the first eight months of this year, compared with 44 per cent for the whole of last year.

HDB upgraders were also active in the secondary market, making up 40 per cent of buyers in the first eight months of 2009, up from their 33 per cent share for full-year 2008.

‘Interest from HDB upgraders can be attributed to the resilience witnessed in the HDB resale market,’ CBRE said.

The top five nationalities of foreign buyers of new private homes so far this year were Malaysians, Indonesians, Chinese, Indians and Britons.

Singapore property counters yesterday recovered after two days of declines following Mr Mah’s announcement. City Developments gained 38 cents or 3.8 per cent yesterday to close at $10.42. CapitaLand ended six cents higher at $3.77. Keppel Land appreciated 3.1 per cent to close at $2.68.