Home prices shoot up, rentals arrest their slide

http://www.businesstimes.com.sg/sub/...56081,00.html?

Published October 24, 2009

Home prices shoot up, rentals arrest their slide

URA's Q3 data points to strengthening property market; supply pipelines shrink, but may bulk up later

By KALPANA RASHIWALA


THE property market appears to be improving across the board - a trend underlined by Urban Redevelopment Authority's data for the third quarter.

Private home prices rose sharply in Q3 over the preceding three months, while prices of office, shop and flatted factory space fell at a slower pace in Q3 than in Q2.

Property rentals - for offices, shops and industrial space as well as most categories of private homes - declined at a more modest rate in Q3.

In tandem with a more cheerful economic climate, positive demand returned to the office market, after three consecutive quarters of negative take-up from Q4 last year to Q2 2009. Supply pipelines are shrinking - although there's still ample supply of offices, shops and industrial space. Vacancy rates increased in Q3 for private homes, offices, factory space but decreased for shops and warehouses. URA's numbers show that the overall private home price index increased by 15.8 per cent in Q3 over Q2, a tad shy of the 15.9 per cent jump reflected in its earlier flash estimate for the same period. The latest rise in the index reversed four preceding quarters of declines.

In the primary market, developers sold a record 5,578 private homes in Q3, up 19.9 per cent from Q2. In the secondary market, the number of resale units sold rose 17.5 per cent quarter-on-quarter to 4,883. However, subsales (these cover projects that have not received Certificate of Statutory Completion) slid 19.3 per cent to 1,057 units. Subsales' share of total private home sales fell from 12.9 per cent in Q2 this year to 9.2 per cent in Q3 - the first time that it has slipped below the 10 per cent mark since Q1 2007.

CB Richard Ellis says that this indicates a toning-down in speculative activity.

Giving his take, Knight Frank chairman Tan Tiong Cheng says: 'All the ingredients for a sustainable recovery in the private housing market are present - local and foreign demand, mid- and high-end prices below their 2007 respective peaks, and still-strong HDB resale flat prices to support upgrader demand.

'Interest rates are also low. Frankly, there are few alternative investment options. These factors will continue to help support buying sentiment.'

However, the government's recent decision to ban the interest absorption scheme and restart confirmed list land sales in H1 2010 will serve to dampen demand and price escalation, Mr Tan added.

Price indices for detached, semi-detached and terrace houses posted quarter-on-quarter increases of 15.6 per cent, 13.4 per cent and 15.1 per cent respectively in Q3.

For non-landed private homes, the price index for completed homes in Core Central Region (CCR) surged 17.5 per cent quarter-on-quarter in Q3, much higher than a 12.8 per cent gain for uncompleted homes in the same region. Similarly, in the Rest of Central Region, prices of completed homes rose 19 per cent, compared with a 17.8 per cent price hike for uncompleted homes. This is in line with anecdotal evidence of secondary market sellers jacking up asking prices.

Going by various measures, the private housing supply pipeline has contracted. The total pipeline shrank from 66,422 units as at end-Q3 2008 to 59,728 units at end-Q3 2009. The number of unsold units in uncompleted projects fell from 42,918 units to 34,120 units over the same period.

The decline stemmed mainly from projects that have not been launched yet, including those that don't even have pre-requisites for sale although they have obtained planning approvals from URA.

However, URA pointed out that five sites recently triggered from the reserve list can generate about 2,000 units. In addition, government will be restarting land sales under the confirmed list in the first half of 2010.

The number of private homes slated for completion is also projected to contract - from 10,893 units for the whole of this year to 5,737 units in 2010.

Market watchers feel that the recovery in private home prices will continue this quarter, but at a slower pace.

CB Richard Ellis executive director Li Hiaw Ho reckons that 'while sales momentum will slow down in Q4 in view of fewer large-scale launches, we expect prices levels to remain stable for the rest of the year'.

ERA Asia Pacific's associate director Eugene Lim is predicting that URA's overall private home price index will post a more moderate increase of about 5-8 per cent in Q4 this year. 'The global economy is only starting to pull itself out of recession and so is Singapore,' he added.

http://www.businesstimes.com.sg/mnt/...EPRICES24A.jpg

http://www.businesstimes.com.sg/mnt/...EPRICES24B.jpg

http://www.straitstimes.com/Prime%2B...ry_445886.html

October 24, 2009 Saturday

Prices jump but rents fall

Rents in decline for the fifth consecutive quarter, down 2.2% in July-Sept

By Fiona Chan


PRIVATE home prices shot up 15.8 per cent in the third quarter, confirming the spectacular jump in the housing market flagged by earlier estimates.

But the massive surge in home prices - the largest in 28 years - has not been matched by a corresponding leap in rents.

Rents of private homes continued their decline for the fifth quarter in a row, falling by 2.2 per cent in the third quarter, according to Urban Redevelopment Authority (URA) figures released yesterday.

Since the beginning of the year, private home rents have fallen 15.2 per cent. Prices are down only about 5 per cent for the year, after the third-quarter surge reversed four previous quarters of decline.

While this could be a sign that the boom in the housing market is not being supported by fundamentals, property consultants are not worried just yet.

This is because prices are now being boosted by sales of brand-new homes, which will not be completed for a few years, said Ms Tay Huey Ying, director of research and advisory at Colliers International.

By that time, the economy is likely to have recovered and businesses will have rehired more expatriates, who are the main tenants of private homes here.

In any case, the decline in private home rents has eased considerably and is on the verge of turning, she said. Colliers' research shows that rents of luxury homes already rose by 3.3 per cent in the third quarter.

Buoyed by improving economic data that showed Singapore's recession ending, home buyers picked up 5,578 new homes from developers in the third quarter, the highest ever, said Mr Li Hiaw Ho, executive director of CB Richard Ellis.

They also bought 4,883 homes from resale market sellers, 17 per cent more than in the second quarter.

But this buying momentum is likely to slow for the rest of the year, said Ms Tay. Home sales in the fourth quarter are generally lower owing to school holidays and the festive season, and this year, sentiment will be further dampened by the Government's recent cooling measures.

As it is, the moves have already had some impact on the market, said Mr Donald Han, managing director of property consultancy Cushman & Wakefield.

He noted that yesterday's official figures on home prices came in slightly lower than the Government's estimate earlier this month of a 15.9 per cent rise.

The estimate takes into account all transactions in the third quarter except for those in the last two weeks - exactly the period after the Government announced its cooling measures on Sept 14.

'The highest price increases probably took place in the first half of the third quarter,' said Mr Han.

The cooling measures appear to have had the biggest effect on homes in the central districts and city-fringe areas.

The URA said yesterday that prices of prime city-centre homes rose 15.2 per cent in the third quarter - down from the 16.2 per cent it had earlier estimated.

Similarly, city-fringe home prices rose 18.5 per cent, according to yesterday's data, which is lower than the 19.1 per cent in the estimates.

Suburban homes were the only ones that rose in price more than estimated: 16.1 per cent, compared to the estimate of 15.4 per cent.

Apart from private homes, other segments of the property market stayed in negative territory in the third quarter, although they registered smaller declines.

Office prices and rents fell by 2.1 per cent and 4.1 per cent respectively, while shop prices and rents dropped by 1.2 per cent and 0.9 per cent respectively.

[email protected]

http://www.theedgesingapore.com/images/logo_s.png
Singapore’s home prices rebound on cheap money, better economy
The Edge
Friday, 23 October 2009

Singapore’s private home prices rose 15.8% in the third quarter, the most in 28 years, as cheap money and improving economic conditions lured buyers.

The price index of private residential property jumped to 154.3 from 133.3 the previous quarter, the Urban Redevelopment Authority said on its Web site today. The increase was the first in more than a year and the biggest quarter-on-quarter gain since March 1981, according to the authority.

“Asset values were knocked down considerably in the global financial crisis and nervous investors pulled out of the market,” Chris Fossick, South East Asia managing director for Jones Lang LaSalle Inc., said in a phone interview. “But unlike the U.K. and U.S., where people were overstretched and had way too high debt levels, in Asia that wasn’t the case.”

Singapore marked its biggest private residential sale in two years yesterday near the main Orchard Road shopping strip. The government raised its forecast for economic growth this month, and Moody’s Investors Service today reiterated the city- state’s top grade Aaa rating, noting Singapore’s “very high economic resilience and robust government finances” derived in part from its high per-capita income.

Singapore’s overnight interbank rate, the rate at which banks lend to each other, is 0.25%, down from 2% in January 2008, according to data compiled by Bloomberg.

Hot Property Deal

Gains were most pronounced for non-landed properties in the quarter.

China Sonangol International Ltd.’s purchase of a site that can accommodate a 36-storey development for $283 million yesterday was Singapore’s biggest private residential sale in two years, according to CB Richard Ellis Group Inc. The site can house 52 three- and four-bedroom apartments and two penthouses. The price equals about $2,058 psf.

CB Richard Ellis is the world’s largest publicly traded commercial-property broker, followed by Jones Lang LaSalle.

“Many investors, after losing faith in the financial system, have come back to basics, which is bricks and mortar and things they understand,” Joseph Poon, head of Macquarie Private Wealth Asia, said in an interview in Singapore today. “Real estate provides good leverage and when asset inflation takes hold you benefit.

Clients of Macquarie Private Wealth Asia must have liquid assets of at least US$30 million ($41.8 million).

Gambling Boost

Kim Eng Holdings Ltd.’s Singapore-based property analyst Wilson Liew said price increases were more subdued for landed and luxury properties only because buyers in that segment typically tend to exercise more caution.

“Because of the absolute quantum that’s required to purchase such apartments, some people are waiting,” Liew said in a phone interview before today’s price statistics. “Buyers want to see the integrated resorts become fully operational because they’re targeted at bringing in the high-rollers. If they put Singapore in the limelight, more people will start putting their money in.”

Genting Bhd., Asia’s biggest publicly traded casino operator, may open its $6.6 billion resort in Singapore before the end of 2009, CIMB Investment Bank Bhd. said Aug. 4 after a recent visit to the site, while Las Vegas Sands Corp. aims to open its casino-resort on the island by February.

Singapore Tourism Board Oct. 12 stuck to its forecast of attracting 17 million tourists to the city-state by 2015 and tripling tourism revenue to $30 billion.

Improving Economy

Singapore’s economy is forecast to shrink between 2% and 2.5% this year, the government said Oct. 12, raising a previous prediction for a contraction of as much as 6%.

The total wealth of millionaires in the Asia-Pacific region shrank 22% to US$7.4 trillion in 2008, compared with the global average drop of 19.5%, according to a report by Cap Gemini SA and Merrill Lynch Wealth Management this month.

Rents for offices dropped 4.1% after declining 7.7% in the second quarter, the Urban Redevelopment Authority said. Those for retail spaces fell 0.9%, compared with a decline of 2% the previous quarter.

“The office space is in complete contrast to the residential market, but I would think that’s stabilizing now,” Li Hiaw Ho, Singapore-based executive director of CB Richard Ellis, said in a phone interview.

Rents for private homes fell 2.2% during the quarter, versus a fall of 5.2% the previous three months, the authority said.