Banner year for property ends with a whimper

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Published January 16, 2010

Banner year for property ends with a whimper

Near-record 14,725 private homes were sold in 2009, but only 481 of them in December

By UMA SHANKARI


PRIVATE home sales fell for the fourth straight month in December, sliding 20 per cent month-on-month to just 481 units.

But the market still finished 2009 strongly with a total of 14,725 units throughout the year - about 3.5 times the number of homes sold in 2008. Total home sales were, however, still a shade lower than the peak transaction volume of 14,811 units in 2007.

'It was a year of opportunistic buying as homebuyers realised that prices had corrected from the peak levels in 2007 - starting with mass-market projects in the first half of the year, filtering into the mid-tier, and then to the high-end projects in the second half of 2009,' said Li Hiaw Ho, executive director for research at CB Richard Ellis.

Reflecting the reversal in sentiment, the Urban Redevelopment Authority (URA) index - the yardstick for private home prices in Singapore - fell 18 per cent in the first half of 2009 but rebounded by 24 per cent in the second half.

While buyer interest has shifted noticeably to high-end and luxury homes over the last few months, 2009 belonged to the mass-market segment.

Data from URA showed that of the 14,725 homes sold during the year, 6,064 were in the outside central region (OCR), which is a proxy for suburban mass-market locations.

The top two projects were Frasers Centrepoint's Caspian (712 units sold) and UOL Group and Kheng Leong's Double Bay Residences (601 units sold).

'While there was a filtering-up of demand to the mid-tier segment in Q2 and Q3 2009, and eventually to the high-end/luxury segment in Q4 2009, along with the uplift in economic prospects and market optimism, mass-market projects in the OCR continued to dominate market activity in 2009,' said Colliers director for research and advisory Tay Huey Ying.

Developers launched 14,103 new private homes in 2009, surpassing the previous high of 14,016 units in 2007. The OCR accounted for the most number of units launched.

Sales last year were driven by six months of strong market activity, which saw both launches and sales staying at above the 1,000-unit level from April to September. In July, which was the peak month, both launch and sales volume crossed the 2,500-unit mark.

Strong signs that the sentiments at the luxury segment is recovering is evident from December's sales figure.

An analysis by Colliers International showed that the number of homes priced between $2,500-$3,000 per square foot surged to 37 units - the highest number of transactions in this price band in 2009 and a marked increase from the five units and 15 units transacted within this price band in October and November 2009.

The bulk of the units sold in this price band in December 2009 came from CapitaLand's newly-launched Urban Suites. And the most expensive unit sold by a developer was an apartment at Nassim Park Residences, which was transacted at $3,650 psf.

In fact, the number of units priced above $2,000 psf has been increasing steadily over the four quarters in 2009, according to an analysis by Savills Singapore. The firm's data shows that four homes priced at above $2,000 psf were sold in Q1, 53 in Q2, 165 in Q3 and 283 in Q4.

Looking ahead, analysts said that the private residential market is expected to stay healthy in 2010 with another wave of buying possibly coming after the Chinese New Year celebrations.

'Going forward to 2010, we expect the demand for new homes to be moderated to a more sustainable level of 8,000-10,000 units and home prices to strengthen by 8-10 per cent through the year,' said CBRE's Mr Li. 'Both sales and price momentum will be led by the high-end segment in the first half of 2010.'

Colliers said that in line with the expected pick-up in activity, home prices in the core central region (which includes the prime Districts 9 and 10, the financial district and Sentosa Cove) are expected to witness the strongest increase of 15-20 per cent in 2010, followed by the mid-tier RCR or rest of central region (8-12 per cent), and then the OCR (5-8 per cent).

But analysts are still holding out hope that the mass market could account for a bigger slice of the pie this year, possibly from H2 2010 onwards.

The buoyant HDB resale market may generate demand from HDB upgraders for mass-market projects in 2010. And mass-market volumes should recover as developers go ahead with planned launches in 2010, said PropNex chief executive Mohamed Ismail.

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Jan 16, 2010

Home sales last year close to 2007 high

Stellar showing despite plunge last month when just 481 units were sold

By Joyce Teo, Property Correspondent


LAST year closed on a low note for developers when a slowing market saw only 481 private home units sold in December but overall 2009 was a far better 12 months than many had expected.

Buyers returned to the market, gingerly at first and then at a gallop to snap up flats that were more affordable than in the madcap days of pre-crisis 2007.

Government cooling measures slowed it all down later in the year as reflected in December's poor sales - down on November's 601 units and the fifth month in a row of decline.

Yet it failed to take much shine off the year's stellar sales numbers: A total of 14,725 private home units were bought, just 0.6 per cent short of 2007's record tally and about 3.5 times sales in 2008.

'The residential market has proven its resilience by rising above the economic recession in 2009,' said CBRE Research executive director Li Hiaw Ho.

Developers launched 14,103 new private homes last year, surpassing the previous high of 14,016 units in 2007, experts noted.

If buyers had not lapsed on their options, 2009's sales would have set a record of 14,991 units.

The Urban Redevelopment Authority's (URA) monthly sales figures - from which the 14,991 figure is derived - do not include lapsed options.

There's no escaping the impact of the financial crisis. Caveats lodged show that the dollar value of new homes sold last year is only 63 per cent of that in 2007, Mr Li said.

'The lower quantum could be attributed to the dominance of mass-market and mid-tier homes in the 2009 basket, compared to 2007, which comprised largely high-end homes,' he added.

Affordability was a key issue last year with buyers - many HDB upgraders - keen on small units as these have a more palatable price. Some 42 per cent of last year's sales were in suburban areas.

Developers cut prices and unit sizes which helped meet demand, said Dr Chua Yang Liang, Jones Lang LaSalle's head of research, South-east Asia.

It was 'a year of opportunistic buying' as buyers realised that prices had corrected from the peak levels in 2007, said Mr Li.

This started in the mass-market segment in the first half of the year before filtering into the mid-tier and high-end projects in the second half, he said.

Prices started to rise around the middle of the year. Government data showed that prices, which fell by some 18 per cent in the first half of the year, had rebounded by 24 per cent in the second half.

Increasingly frenzied buying from February prompted the Government to step in in mid-September with measures to take the heat out of the market.

Transactions duly fell, with December the fifth consecutive month of sales decline after transactions had peaked in July at 2,772 units.

With buyers holding back, developers launched fewer units last month. Just 734 were launched, down from 923 in November, according to URA data yesterday.

The best seller last month was Far East Organization's The Shore Residences, located opposite Katong Shopping Centre. It launched 136 units and sold 79 for between $1,002 and $1,318 per sq ft (psf).

CapitaLand's Urban Suites also did well in a quiet month, selling 59 units for $2,180 psf to $2,765 psf.

There has been a noticeable pick-up in demand for units priced above $2,000 psf in the second half, though the total number has yet to make an impact.

Overall, the take-up rate of new launches slowed towards the end of last year, said Dr Chua.

He said this suggested that the Government's mid-September announcement of anti-speculative measures had some effect on demand.

While sales were strong last year, demand, especially in the mass market, has become more sustainable, said Dr Chua.

'As such, we do not expect further government measures in the immediate to short term unless transaction volume and prices begin to move out of pace with the larger economic recovery again,' he added.

Consultants expect demand for new homes to moderate to between 7,000 and 10,000 units this year.

CBRE Research is tipping price rises of 8 to 10 per cent, with sales and price momentum to be led by the high-end segment in the first half.

Colliers International expects a more optimistic 12 to 15 per cent rise in prices.

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