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New home sales garner bigger slice of private market

They take up 46% of all transactions in 2011 as local market changes

Published on Jan 23, 2012

By Esther Teo, Property Reporter


SINGAPORE'S property landscape is changing, with new home sales by developers making up an increasing share of the private market.

Primary market sales, including those of executive condos (ECs), accounted for 46 per cent of all transactions lodged last year - the highest level since 2003 - according to caveats lodged with the Urban Redevelopment Authority (URA).

The other 54 per cent was made up of secondary market deals - which include those for both resale and subsale homes - totalling 17,405 units.

Subsales are basically sales before completion, and involve projects that have yet to receive a Certificate of Statutory Completion (CSC), while resales are of existing homes - those developments with CSC.

Secondary sales have gradually ceded their share of the market, as the Government has pushed out a huge supply of land in the past couple of years to cool rising property prices, experts say.

This recovery of the collective sale market in 2010 also led to more new launches last year and a plethora of choices for home buyers, who then flocked to that segment instead.

The secondary market peaked with 71 per cent of all transactions in 2008 as developers held back new launches as the global financial crisis unfolded, but its proportion has been falling since then.

The figure for 2010 was 61 per cent.

Mr Ong Teck Hui, head of research and consultancy at Credo Real Estate, said that the series of cooling measures might have also shifted the dynamics of the market.

The sellers' stamp duty of up to 16 per cent imposed in January last year, for example, could have prompted some investors to look to new home purchases instead, as they can minimise their capital exposure due to progress payments.

This means that the purchase price of the home is paid in instalments as the developer completes the different stages of construction.

'Also, by the time the property is completed in about three years, they would only be penalised with a relatively small 4 per cent sellers' stamp duty if they sell it in the fourth year, or (might) escape it altogether if they hold the unit for a bit longer,' Mr Ong said.

Subdued land sales from 2001 to 2005 also resulted in a falling primary market share from 2003 to 2008, he noted.

Experts pointed out that while developers' new private home sales have kept relatively firm at about 16,000 units in each of the past two years, secondary market transactions have plunged 26 per cent in the same period.

SLP International research head Nicholas Mak added that the recently introduced additional buyer's stamp duty is likely to lead to lower secondary market sales, as there will be a mismatch in price expectations between buyers and sellers over the next few months.

Mr Alan Cheong, associate director of research and consultancy at Savills Singapore, noted that sellers in this segment are typically individuals with finances that are weaker than that of developers'.

It will be an interesting segment to watch, he added, as sellers in the secondary market may have to lower their asking prices to attract buyers who have been gravitating towards new launches, which are likely to see prices flatline due to the ample supply in the pipeline.

Property investor Tan J. H., a marketing executive, said that he chose to buy a new unit rather than a resale home in Upper Bukit Timah last year, because of the concept that the condo project offered.

'The showflat was very nice, and we thought that the product offering was much better than some of the older resale homes we were seeing,' he added.

'The newer condos seem to have better concepts or themes and good furnishings... Older condos are more simple and plain, they don't come with all the frills like the facilities and amenities.'

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