Prime landed home prices at new high: DTZ

Source : Straits Times – 19 Dec 2009

SKY-HIGH prices of resale landed homes at some of the best addresses in town have already set fresh record highs this year despite the still tentative economic recovery, a new report has found.

The latest report from DTZ Research singles out resale landed homes in the prime 9, 10 and 11 districts – including the Orchard, Tanglin and Bukit Timah areas.

Among the poshest of all homes, good class bungalows (GCBs) also recorded a new per sq ft price high. However, prices of luxury non-landed homes – mainly condos – are still playing catch-up.

The average price of prime freehold landed resale homes rose 4.6 per cent in the fourth quarter – or 18.6 per cent for the whole of the year – to reach a new high of $1,447 per sq ft (psf).

This is nearly 12 per cent above the previous high of $1,293 psf achieved in the first quarter of last year, it said.

Outside the prime districts, the average price of freehold landed resale homes climbed 2.8 per cent in the fourth quarter – or 12.2 per cent for the whole year – to touch $860 psf.

This is 7.9 per cent higher than the $797 psf reached in the previous peak in the first quarter of last year. However, it is still 8.8 per cent below the price recorded in an even earlier peak period in the second quarter of 1996.

GCBs are like hen’s teeth, with only about 2,400 of them – situated on sprawling land sites – in all of Singapore.

A new record price was set this year. One 25,231 sq ft GCB at Leedon Park was sold in October for $1,407 psf, or $35.5 million overall, breaking the previous psf record of $1,308 psf for a White House Park GCB sold in August 2007, experts said.

More wealthy buyers were willing to fork out more to land a GCB this year. Savills Singapore said that 17 GCBs were sold for above $20 million each this year, up from 11 last year.

Of this number, seven GCBs were transacted at $30 million and above this year, up from two last year and none in 2007, said DTZ.

Head of DTZ South-east Asia research Chua Chor Hoon noted that prices paid for landed and mass market homes, mainly by owner-occupiers, fell less than the prices for mid- and higher-tier non-landed homes in the recent economic malaise.

‘As the recovery this round is led by owner-occupiers and long-term investors, backed by ample liquidity and low interest rates, the demand has quickly driven up prices of the more affordable mass market and the landed homes market where there is less supply,’ she said.

In the non-landed freehold homes segment, resale prices have, with the exception of luxurious units, recovered to near 2007 peak levels this year.

Prices of these prime district units rose an average 2.4 per cent in the fourth quarter – or 20.6 per cent for the full year – to $1,403 psf. This is just 5.4 per cent short of the $1,483 psf in the fourth quarter of 2007 when prices peaked.

In the luxurious apartment segment, higher price increases were recorded in the fourth quarter, compared with the mass and mid-tier markets.

DTZ said its study found that the average price of resale luxurious homes rose 9.1 per cent to $2,400 psf, about 14 per cent below the previous peak of $2,800 psf in the fourth quarter of 2007. The full-year rise was 23 per cent, it said.

Prices of leasehold non-landed resale homes stagnated at $610 psf on average in the fourth quarter, as buyers held off.

After all, prices in this category have risen to 2007 peak levels within two quarters, said DTZ. The previous high of $615 psf was hit in the fourth quarter of 2007.

The rental market stabilised in the second half, with the average rental value of luxurious units down the most this year. It fell 27.3 per cent to $4.65 psf per month – the lowest level since the fourth quarter of 2005.

If the economic recovery remains firmly on track, property prices are likely to appreciate further next year by up to 10 per cent, with more upside seen for the higher end of the market, said Ms Chua.

‘Affordability is a constraining factor in the mass market segment and any price increase there would depend on the job market. We expect more moderated price increases in 2010 as much of the pent-up demand has been satisfied.’