http://www.businesstimes.com.sg/archive/tuesday/premium/top-stories/private-resale-home-prices-slip-further-20140114
Published January 14, 2014
Private resale home prices slip further
By Mindy Tan
[email protected]
[SINGAPORE] Prices of private resale homes extended their decline in December for a fourth straight month, led by falls in the core central region (CCR), flash figures released yesterday by the Singapore Real Estate Exchanges (SRX) showed.
This trend is likely to continue into 2014, say consultants, as the Total Debt Servicing Ratio (TDSR) framework and other cooling measures take their toll.
Prices of homes in the city area fell 2.3 per cent in December, followed by those in the Outside Central Region (OCR), which dipped one per cent. Only homes in the Rest of Central Region (RCR) bucked the trend, rising 2.9 per cent. Overall, the price index eased 0.2 per cent last month.
"I believe that secondary resale prices are taking their cue from the primary market where many developers have slashed their launch prices in a bid to attract buyers," said Mohd Ismail, chief executive officer of PropNex Realty.
The decline in CCR resale prices is not surprising, given the ample unsold stock by developers and the impact of the TDSR and Additional Buyers' Stamp Duty (ABSD) on prospective buyers, said Ong Kah Seng, director at R'ST Research. Meanwhile, in the OCR, buyers are resisting prices which have hit an all-time high.
Prices in the RCR, on the other hand, have become more "realistic" after developers and owners lowered asking prices last year. Opportunistic investors could have snapped up units in December, driving up prices, on the belief that it is easier to rent units to expatriates in the early part of the year.
As at last Friday, 98 CCR, 85 RCR and 176 OCR transactions were lodged. SRX estimates that some 377 homes were transacted on the secondary market last month, taking into account delays in lodging the data. The figures are based on lodgements made by 401 agents (including those who co-broke deals) from SRX's member agencies.
The total number of private non-landed transactions fell to an estimated 6,550 last year from 12,278 in 2012.
Property sentiment is expected to remain muted in the near future as resale prices continue to be under pressure as developers cut prices for new launches to move units. Demand will also wane as buyers favour new launches over resale units because of lower upfront cash requirements, said Steven Tan, managing director of OrangeTee.
"In this softening rental market, some investors would prefer to buy new launches to avoid vacancy costs," he added.
As a result of falling cash-over-valuations (COVs), the potential pool of HDB upgraders becomes smaller as upgraders would not be able to equitise their flats for as much as before, noted Mr Tan.
PropNex's Mr Ismail expects marginal price corrections of less than 3 per cent in the RCR and OCR, where the bulk of completions is expected. In the CCR, prices could ease further as the ABSD and TDSR continue to bite, he reckons.
Eugene Lim, key executive officer of ERA Realty, expects prices to ease further by between 6 and 10 per cent this year.
With an estimated 20,000 private residential homes expected to be completed this year, sellers and landlords will face increased competition for buyers and tenants, said Lee Lay Keng, head of Singapore Research at DTZ.
SRX said overall rents slipped 1.3 per cent in December for the fifth consecutive month. Rents in the CCR dropped 1.8 per cent followed by rents in the RCR which dipped 0.9 per cent. Rents for OCR homes slipped 0.5 per cent. An estimated total of 2,188 rentals were recorded in December.
The SRX price index is computed using a hedonic regression model. The index is thus revised when new data comes in. The model is frequently used to construct housing price index, in the absence of specific market data.