Private home sales set to stay subdued

Source : Straits Times - 16 Oct 2008

376 units sold in Sept - up from 325 in August but down from 902 in July

SALES of new private homes are likely to stay subdued for the rest of the year with last month’s numbers reflecting the gloomy sentiment.

Developers sold 376 private homes last month, up from 325 in August but down from 902 in July, according to Urban Redevelopment Authority data out yesterday.

This puts private home sales in the first three quarters at 3,890 units, compared with 14,811 units for last year.

September sales were driven by new launches with 767 units released, up significantly from just 194 in August, when many players and buyers kept away due to the Hungry Ghost Month, said experts.

Sales have remained poor partly because developers have opted for smaller price cuts by absorbing stamp duty, for instance, said Mr Colin Tan, head of research and consultancy at Chesterton Suntec International.

CBRE Research executive director Li Hiaw Ho noted that there is still no broad-based decline in home prices based on last month’s sales, with just a slight easing in Bukit Timah and Newton.

However, given that Singapore is already in a technical recession and with the uncertainties ahead, price pressure is expected, experts said.

CBRE expects a further fall in overall home prices of 2 per cent to 4 per cent in the last quarter.

‘Prices should reflect fundamentals or else the gap between actual versus fair value will widen,’ said Mr Tan. If the gap continues to widen, conditions will build up to a point where a sharp price correction is inevitable.

‘In a sharp price correction, everyone loses as panic sets in and sometimes prices go below fundamentals,’ he added.

Colliers International’s director for research and advisory Tay Huey Ying said supply will weigh on prices as the stock of unsold units is accumulating as sales fail to keep pace with launches.

There was a take-up rate of just 31 per cent last month with an estimated 234 out of 767 launched units sold, she said.

Luxury properties remain out of favour with only modest sales achieved and none above $4,000 per sq ft (psf), compared with three in the previous quarter.

Said Knight Frank’s director of research and consultancy Nicholas Mak: ‘This is another indication that the boom in the high-end segment has subsided.’

Mid-tier projects saw the most sales last month, with Hong Fok’s 360-unit Concourse Skyline in Beach Road the top seller. Out of the 100 launched units, 68 were sold at prices ranging from $1,272 psf to $1,871 psf.

MCL Land’s The Peak @ Balmeg in Balmeg Hill and Soon Lian Realty’s Tresalveo in Marymount Terrace did relatively well. Buyers picked up 47 out of 90 launched units at the 180-unit The Peak @ Balmeg, paying between $854 psf to $1,147 psf for the project.

At Tresalveo, buyers bought 41 out of 60 launched units of the 176-unit development near Jalan Pemimpin for between $902 psf and $1,045 psf.

Other new releases include Far East’s 99-year leasehold condo in Marine Parade called Silversea, where 11 units were sold at a median price of $1,400 psf.

Consultants expect sales to remain at last month’s levels as developers hold out for market confidence to rebound.

‘Support from HDB upgraders will still be evident since the HDB resale market is going strong,’ said CBRE’s Mr Li. ‘But other potential buyers would prefer to wait…for a more sustainable solution for the global financial turmoil.’

While prices of mass-market homes should remain stable for the next quarter, the impact of recessionary pressures remains imminent and may pose downside risk to this market over the next six months, said Dr Chua Yang Liang, head of research for South-east Asia at Jones Lang LaSalle.