Homes of over $1.5m cut bigger slice of Q2 deals

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Published August 27, 2009

Homes of over $1.5m cut bigger slice of Q2 deals

They make up 22% of total transactions, compared with 10% a quarter earlier

By KALPANA RASHIWALA


(SINGAPORE) Improved sentiment in the private residential sector has filtered from the mass market to the upper tiers in the second quarter of this year, an analysis of caveats shows.

The proportion of caveats in Q2 for private housing transactions above $1.5-million was bigger than in Q1.

A study by DTZ shows that 22 per cent of transactions in Q2 were for deals above $1.5 million, compared with just 10 per cent in Q1.

Also, the number of transactions in the $1,500-1,999 per square foot (psf) range jumped more than 10 times, from 34 units in Q1 to 369 in Q2. And the number of deals for units costing $2,000 psf or more rose from just 10 in Q1 to 67 in Q2.

Another indicator of activity spreading to the higher end of the market is that a quarter of caveats lodged in Q2 were for properties in the prime districts 9,10 and 11, up from 14 per cent in Q1.

Buyers with private addresses accounted for 56 per cent of private home purchases in Q2, up from 44 per cent in Q1. This reflects a spillover of buying from the mass market to the upper tiers, DTZ said.

Conversely, HDB upgraders' share of caveats lodged for private home purchases slipped from 56 per cent in Q1 to 44 per cent in Q2.

'HDB upgraders have been able to participate in the current home buying wave due partly to the wealth effect brought about by rising HDB resale prices,' said DTZ South-east Asia research head Chua Chor Hoon.

'As well, wages went up in the past few years prior to the stagnation and wage cuts seen last year and this year. As a result, prices of entry-level private condos are generally still quite affordable for HDB upgraders.

'But if developers keep on increasing prices, mass-market private condos will become less affordable again to HDB upgraders.'

DTZ's analysis shows that 75 per cent of total private housing deals involving buyers with HDB addresses were at or below $1 million in Q2, down from 87 per cent in Q1.

Also, 37 per cent of buyers with HDB addresses picked up properties in the $600,001-800,000 band in Q2. In contrast, 60 per cent of buyers with private addresses purchased units costing above $1 million.

DTZ found that buyers with HDB addresses acquired smaller homes than buyers with private addresses.

It said that 77 per cent of purchases involving HDB upgraders were for homes up to 1,400 sq ft, compared with 52 per cent of transactions by buyers with private addresses in Q2.

The property consultancy also said that 88 per cent of purchases by HDB upgraders were for homes outside districts 9, 10 and 11. HDB upgraders bought mostly mass-market condos. Their most popular picks were Mi Casa in Choa Chu Kang and Double Bay Residences in Simei, with respective median selling prices of $633 psf and $663 psf.

Looking ahead, Ms Chua reckoned that activity will continue to filter to the upper levels of the private housing market for the rest of this year in tandem with a general improvement in the Singapore economy.

'As well, most economies seem to have seen their worst and are improving,' she said. ' That will help to bring back more foreign buyers to the Singapore property market.'

Some market watchers said that whether the upper end of the market sees more transactions hinges partly on developers' willingness to launch more high-end and luxury projects.

But Knight Frank executive director (residential) Peter Ow reckoned that the likelihood of a significant pick-up in launches over the next few months in these segments is slim.

'We can see that for the mass-market and mid-tier projects, the take-up rate slows when developers raise prices,' he said.

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August 27, 2009 Thursday

More buyers now going for pricier homes

By Joyce Teo


THE property boom is fast spreading to the upper reaches of the market, with more people buying premium-priced homes, according to data from property consultancy DTZ.

The firm's analysis of caveats lodged shows that 22 per cent of total private home sales in the second quarter were for homes priced above $1.5 million, compared to 10 per cent in the first quarter.

Buyers living in private residences bought 4,651 homes between April and June, more than the 3,710 homes purchased by HDB-based buyers. DTZ said that this showed a spillover of demand from the mass market to the mid- and higher-tier segments.

It is a turnaround from the first quarter, when HDB upgraders and first-time buyers outnumbered buyers living in private homes. Seven in 10 buyers of new private homes in the first three months of the year had Housing Board addresses.

The DTZ data highlights that 25 per cent of property hunters snapped up homes in the prime 9, 10 and 11 districts in the second quarter, up from 14 per cent in the first quarter. It was the first time in 11/2 years that sales in prime districts exceeded 20 per cent of total sales.

DTZ head of South-east Asia research Chua Chor Hoon said: 'We have definitely seen more investors coming back in recent months.

'As private home prices have corrected 10 to 33 per cent from their 2007 peak to the lows of the first quarter of 2009, Singapore households have ploughed savings accumulated during the prosperous years in 2004 to 2007 into the property market.'

Resilient HDB resale prices have created a wealth boost for HDB upgraders, causing the proportion of buyers with HDB addresses in the second quarter to reach 44 per cent. Though a smaller proportion than in the first quarter, this was well ahead of the 29 per cent seen in 2006 when the market started to pick up, notes DTZ. HDB upgraders and first-time homebuyers typically buy into mass market condominiums, which are usually lower-priced homes in suburban areas.

In the second quarter, about 75 per cent of buyers living in HDB flats bought homes for less than $1 million. Nearly half spent from $600,001 to $800,000.

In comparison, some 60 per cent of buyers living in private homes bought units costing more than $1 million.

A larger group of buyers living in HDB flats bought smaller units of 1,400 sq ft or below. This can prove to be more affordable as the total quantum price can be relatively low, even if the per sq ft price is on the high side, experts said.

Keen buying interest spilled into the secondary market, with sub-sales of non-landed homes trebling to 1,200 units in the second quarter. The sub-sale price of these homes rose 18 per cent to $960 per sq ft (psf) from $813 psf, said DTZ.

Foreign buyer numbers rose, but they still bought only 15 per cent of private homes priced above $1,110 psf in the second quarter, compared with 29 per cent for the whole of 2006. Such buyers are increasingly moving to mid-tier properties on the city fringes, DTZ observed.

Ms Chua predicted more units to be transacted at $1.5 million-and-above in the current quarter, as more projects in the $1,500 psf to $2,000 psf price bracket came onto the market in July and August.

But if private home prices continue to move far ahead of HDB resale prices, HDB upgraders could be forced to pull back, said Jones Lang LaSalle's head of research for South-east Asia, Chua Yang Liang.

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