After red-hot December, property braces for chill

Published January 18, 2011
The Business Times
By Kalpana Rashiwala

Private home sales sizzled before cooling measures; 2011 expected to be a more sobering story

December may have been chilly in the rest of the world, but for Singapore’s property market, it was simply sizzling. The latest numbers underscore the backdrop against which authorities introduced last week’s cooling measures.

Total number of private homes sold (excluding EC)Developers sold 1,332 private homes (excluding executive condos) in the traditionally slow month, exceeding the combined figure for the three preceding Decembers. This took the total for 2010 to a fresh high.

But property consultants expect the numbers to drop dramatically this year from the 16,364 private homes that developers sold in 2010 – in the face of the latest cooling measures.

Forecasts for developers’ private home sales this year range from 8,000 to 12,000 units. Prices too are expected to drop with one consultant pegging the dip at 5 per cent for the mass market in the first quarter.

Speculators may now turn their attention to shoebox industrial units and strata offices and shops as non-residential property has been spared under the latest cooling package, observers say.

The 2010 sales number was 11.4 per cent above 2009’s 14,688 units and surpassed the previous high of 14,811 units set in 2007, according to figures released yesterday by the Urban Redevelopment Authority.

The secondary market has also been buoyant.

Knight Frank’s analysis of URA Realis caveats data shows a 23 per cent increase in the number of private homes (excluding ECs and en bloc sale units) sold in the resale market last year to 18,468 units. In addition, 3,264 caveats were lodged for private homes traded in the subsale market in 2010, close to the 3,838 units in 2009.

The 2010 resale and subsale figures are expected to increase as more caveats are lodged in the coming weeks. Resales refer to secondary market deals in projects which have received Certificate of Statutory Completion while subsales involve secondary market transactions in projects that have yet to receive CSC.

DTZ’s South-east Asia research head, Chua Chor Hoon, forecasts that this year, developers may sell about 8,000-10,000 private homes. Knight Frank’s number is 10,000-12,000 units.

Ms Chua reckons that prices would decline this year but not in the first quarter, when transactions are likely to thin amid a standoff between buyers and sellers. ‘When sellers see demand is not coming back, those who need to sell will have to be more open to negotiation. I think prices in the mass and mid-market segments are likely to fall more as the lower loan-to-value (LTV) limits will hit those on a tighter budget.’

Knight Frank consultancy and research head Png Poh Soon foresees an up to 5 per cent price decline in Q1 for the mass-market segment while prices remain flat in the mid and luxury markets. ‘Developers of mass-market projects, which are typically bigger, may be more inclined to price their projects attractively to draw buyers.’

Mr Png also reckons that sales of shoebox apartments would plunge as these have drawn many speculators, who are expected to be affected by the stiffer penalties for short-term trading now.

The government last week hiked the seller’s stamp duty rate to as high as 16 per cent for private homes sold within the first year. The LTV limit for new home purchases by individuals servicing one or more existing housing loans has been lowered from 70 per cent to 60 per cent.

Ms Chua said that strong primary market sales for two consecutive years reflect ‘a lot of speculative and investment demand’. ‘Now, with the clampdown on the residential sector, a lot of investors will look at other property sectors as well as overseas properties.’

Savills Singapore senior manager Christine Sun said: ‘Small investors may switch from buying ‘mickey mouse’ apartments to small strata industrial and office units, or HDB shophouses which still command attractive yields without bearing the brunt of the property measures.’

URA’s figure of 1,332 private homes sold by developers in December was 30.4 per cent lower than November’s 1,915 units but significantly above sales of 481 units in December 2009, 131 units in December 2008 and 305 units in December 2007.

Including ECs, the trend was similar, with the sales tally at 1,699 units for December 2010, more than the 940-unit total for the preceding three Decembers.

Including ECs, developers sold 17,438 private homes last year, up from 14,688 units in 2009 and also surpassing the 2007 figure of 14,967 units.

The Outside Central Region (OCR), where mass-market projects are located, made up 45 per cent of private homes (excluding ECs) sold by developers in December. The number of units they sold in Core Central Region (CCR), which includes the prime districts, CBD and Sentosa Cove, doubled from 218 in November to 449 in December.

‘Reflecting the pick-up in investor confidence in CCR, where the price rise has lagged, 75 non-landed homes were transacted at above $3,000 psf in December, up significantly from 11 units in November and the most deals in this price-band since the 103 units sold in December 2007,’ said Colliers director Tay Huey Ying

December’s priciest deal was $4,307 per square foot, for a unit at The Ritz-Carlton Residences Singapore Cairnhill, followed by Nassim Park Residences ($3,833 psf) and Tomlinson Heights ($3,643 psf). Last month’s best selling project was Prive, an EC in Punggol (326 units), followed by The Tennery in Choa Chu Kang (220 units), D’Leedon at Farrer Road (180 units) and Robinson Suites (157 units).


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