Home sales up, but pace slowing

Source : Straits Times - 16 Aug 2008

Prices slip in July though sales up for 3rd straight month; high-end hard hit

NEW home sales rose last month for the third month in a row, but the pace of growth braked sharply and the prices of sold homes slipped.

Developers sold 897 new private homes in July, 12 per cent more than in June and the highest number since last August, according to data released by the Urban Redevelopment Authority yesterday.

Close to nine out of every 10 homes sold last month were suburban units that cost $1,000 per sq ft (psf) or less. No homes were sold above $4,000 psf for the second consecutive month.

This trend is likely to continue, property consultants said, as persistent caution in the high-end market is causing developers to delay expensive launches.

Even then, developers continued to launch more units across the board than they were able to sell last month, adding to the inventory of unsold homes, observed Mr Nicholas Mak, director of research and consultancy at Knight Frank.

Consultants also predicted that the pattern of rising sales will be reversed this month.

Launches and transactions will probably fall thanks to the perceived unlucky ‘Hungry Ghost’ period, while market sentiment is expected to remain negative amid more dismal global economic news coming out of the United States and Europe.

Already, last month’s sales growth was a far cry from the 77 per cent jump in sales between May and June, consultants said.

Last month’s figures were boosted by sales from four large-scale suburban projects that together accounted for almost two-thirds of the whole month’s deals. Livia in Pasir Ris saw 301 apartments taken up, at a median price of $671 psf. Of these, four crossed the $750 psf mark, but the rest were well within the $500 to $750 psf range.

Clover by the Park in Bishan sold 100 units at a median price of $753 psf, down slightly from the median $765 psf it had fetched in June.

And Kovan Residences in Kovan Road sold 87 units at a median price of $882 psf - just below its $887 psf in June - while Beacon Heights in St Michael’s Road sold 61 units at a median price of $865 psf.

In the mid-tier segment, Parc Sophia in Dhoby Ghaut was the best performer, selling 25 units at a median price of $1,503 psf.

CapitaLand’s Wharf Residences near Robertson Quay sold 23 units at a median price of $1,506.

Generally, prices have come under pressure from the gloom in the market and are starting to dip, consultants said.

The lowest transacted price in the suburban region fell 23 per cent last month from June, while the lowest price in the central region fell 7 per cent, noted Dr Chua Yang Liang, Jones Lang LaSalle’s head of South-east Asia research.

He said buyers of suburban projects are probably comfortable with paying $650 to $850 psf right now, while those looking for well-located city-fringe homes have budgets of $850 to $1,000 psf.

Sales were dismal in the high-end segment, with only eight units - less than 1 per cent of total sales - transacted above $3,000 psf. At the height of the property fever in July last year, 217 units fetched more than $3,000 psf, accounting for more than 15 per cent of the total units sold then.

But there are still some buyers willing to pay a premium for prime projects, said Mr Li Hiaw Ho, executive director of CB Richard Ellis Research.

He noted that five units were sold at The Hamilton Scotts in Scotts Road, for between $3,000 and $3,676 psf.