Private resale home deals shoot up in Q2

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Published June 25, 2009

Private resale home deals shoot up in Q2

Average resale prices up from Q1 but still significantly below peak levels last year

By KALPANA RASHIWALA


THE buying frenzy at property launches has spread to the secondary market. The number of private homes sold in the resale market - excluding sub-sales - has risen to 1,464 units this quarter, based on Urban Redevelopment Authority caveat data at June 19.

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One Devonshire: CBRE expects developers to sell 3,500 to 4,000 new private homes this quarter - 35-54% higher than the Q1 figure of 2,596

The figure is 71 per cent higher than the 856 units in Q1 this year, according to an analysis by Jones Lang LaSalle (JLL).

And more caveats could surface when full Q2 data emerges, with sales matching - or even surpassing - the 1,706 units sold in the resale market in Q2 last year, JLL reckons.

Average resale capital values have risen in Q2 from Q1 but are still below last year's peaks across all tiers - mass market, prime and luxury prime. This could be a key factor fuelling resale deals. Another factor could be HDB upgraders keen on buying a completed private home they can move into immediately. Also, rental yields from investing in completed property are higher than the measly interest rates earned on fixed deposits.

In another development yesterday, CB Richard Ellis said the median price per sq ft of freehold non-landed private homes sold by developers slipped 14.6 per cent from $1,051 psf in Q1 2009 to $898 psf in Q2, based on caveat data as at June 24.

However, once caveats for higher-priced projects like Martin Place Residences, The Wharf Residences and One Devonshire are lodged, the median psf price for Q2 is expected to be higher than the Q1 figure, CBRE added.

The firm expects developers to sell 3,500 to 4,000 new private homes this quarter, which would be 35 to 54 per cent higher than the Q1 figure of 2,596. The expected Q2 sales tally would be similar to levels achieved during the peak year of 2007, when developers sold an average of 3,700 units per quarter.

'The stock market rally, coupled with strong liquidity and developers' discounts, have resulted in a surge in new home sales this quarter,' CBRE executive director (residential) Joseph Tan said.

JLL's head of research (South-east Asia) Chua Yang Liang said additional factors buoying buying sentiment include pent-up demand and the interest absorption schemes. However, he cautioned: 'I don't reckon the current activity in the market is likely to remain if prices continue to rise unsupported by GDP growth.'

CBRE said that based on caveats lodged so far, HDB upgraders accounted for 65 per cent of buyers of new homes in the first half of 2009, higher than their 44 per cent share for the whole of last year. HDB upgraders have also been active in the secondary market, accounting for 49 per cent of buyers of resale and sub-sale units, up from their 33 per cent share last year, the firm added.

Sub-sales and resales are secondary-market transactions. Sub-sales involve projects that are yet to obtain a Certificate of Statutory Completion (CSC). Resales relate to projects that have received CSC.

JLL's analysis shows the average resale capital value for non-landed homes in the mass market was $580 psf in Q2, up 9.4 per cent from Q1. It is also 17 per cent below the Q1 2008 peak and remains highly affordable to most HDB upgraders, JLL said.

In the luxury market, the average resale capital value rose 7.8 per cent quarter on quarter to $1,800 psf in Q2. Against the peak in early 2008, the latest Q2 figure was down 34 per cent.

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http://www.straitstimes.com/Prime%2B...ry_394932.html

June 25, 2009 Thursday

Boom in resale homes

Transactions up 71% in the second quarter, with HDB upgraders driving demand

By Joyce Teo


THE mini boom that started in the sale of new flats has now spread to the resale homes market, with transactions rocketing 71 per cent in the second quarter.

Sellers have quickly become attuned to the unexpected resurgence in demand and are jacking up asking prices, according to consultants Jones Lang LaSalle.

Much of the demand is coming from HDB upgraders who are still able to get reasonable prices for their flats, allowing them to move up the housing ladder.

The activity in the resale market follows strong sales of new private homes. Levels have exceeded 1,000 units every month since February compared with a monthly average of 330 units last year. Prices are also showing resilience amid the downturn, with resale prices beginning to rise in all categories.

The property sector rallies seem to contradict prevailing economic realities, industry experts acknowledge. DTZ's head of Southeast Asia research, Ms Chua Chor Hoon, told a property seminar yesterday that it is too early to tell if the Singapore market is on its way to recovery: 'Unlike Hong Kong, we don't have a China behind us.'

Jones Lang LaSalle's head of research for Southeast Asia, Dr Chua Yang Liang, told The Straits Times: 'My concern is that the price rise in the resale market is not supported by economic growth or personal income growth.' It is instead largely backed by money earned in the previous bull run, which is not sustainable, he said.

Resale demand, said Jones Lang LaSalle, is largely for finished projects, driven by the need for immediate occupation and good rental yields. Prelimary second-quarter estimates show HDB upgraders accounted for 46 per cent of resale deals, up 11 percentage points from a year ago.

HDB prices have not fallen much, so owners can still sell at attractive prices and upgrade to a private home. The demand has pushed up resale prices, even though affordability remains key.

While prices of freehold units were down 14.6 per cent on a per square foot (psf) basis in the second quarter, new mass market home prices were up nearly 7 per cent, said a CBRE Research statement yesterday. Subsale prices of 99-year leasehold apartments rose by 22 per cent in the second quarter.

When compared with prime market sectors, the mass market segment shows the highest rebound, said Jones Lang LaSalle. Average resale prices were up 9.4 per cent to $580 psf in the second quarter compared with the first quarter.

They are now 49 per cent above the low point of the second quarter of 2005 but remain about 17 per cent below the first quarter peak last year.

Average resale prices of prime luxury homes rose 7.8 per cent from the first quarter to $1,800 psf in the second quarter. But this is a fall of 45 per cent from the second quarter of 2008.

Some buyers are increasingly more willing to commit as they believe this discount is sufficient, said Jones Lang LaSalle. For instance, resale deals at Ardmore Park were done at an average of $2,146 psf in the second quarter compared with one deal at $1,976 psf in the first quarter.

Some analysts warn of too much exuberance given the ample supply and falling rents but others are more positive. A recent Credit Suisse report said that while new homes sales may slow, the resale market is likely to pick up the slack. An earlier UBS Investment Research report highlighted the rise in resale deals as evidence of sustainable recovery in the physical property market.

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Signs of upturn in resale market: JLL report

by Cheow Xin Yi

05:55 AM Jun 25, 2009


As buyers thronged showflats amid improved sentiment in recent months, the resale market also saw an uptick in the second quarter, according to a report by Jones Lang LaSalle (JLL).

Using recent housing data, the consultancy estimated that resale volumes increased more than 70 per cent from the first quarter to reach 1,464 transactions.

The two main reasons were pent-up demand from Housing Development Board (HDB) upgraders - whose own flats were seeing slower price declines than private homes - and the affordable pricing despite marginal increases, said JLL.

HDB upgraders made up almost half the buyers in the second quarter's resale market, some 11 percentage points above the 35 per cent recorded in the same period a year earlier.

Further attracting HDB upgraders was the fact that resale prices for private homes remain "highly affordable", JLL said. While current average resale prices in the mass market have surged 9.4 per cent from the previous quarter to $580 per square foot (psf) - the highest rebound across other submarkets - they remain 17 per cent below the peak of the first quarter of last year, the firm estimated.

In the luxury segment, it found that buyers were more willing to commit, seeing that average prices of $1,800 psf represented a 34-per-cent discount from peak. This is despite current prices being 53 per cent above the last trough in the first quarter of 2005, JLL noted.

South East Asia head of research Dr Chua Yang Liang believes the uptick is not sustainable, as the buoyancy is coming from short-term factors such as pent-up demand, discounted pricing and attractive mortgage packages.

The sustainability of any market recovery, he said, depends on longer-term factors such as growth in demand and economic production.

"I do not reckon the current activity in the market is likely to remain if prices continue to rise unsupported by growth of gross domestic product," Dr Chua said.