Published September 26, 2012

S'poreans buy more luxury homes this year

By zeinab yusuf saiwalla

AFTER a short lull in the first quarter of this year, Singaporeans seem to be trotting back to the luxury property market, with the total number of units purchased by them so far this year surpassing the total number transacted by this group in the whole of last year.

A total of 46 luxury homes were purchased by Singaporeans in 2012, as compared to 40 homes in 2011, according to a report released by DTZ.

The spike was contributed primarily by transactions made in Q2, which saw a total number of 31 luxury homes purchased by Singaporeans as compared to 11 in the same period last year.

The proportion of purchases made by Singaporeans was found to have increased significantly from 19 per cent in 2011 to 35 per cent in 2012 year to date almost on a par with foreigners.

For the first three quarters of this year, foreigners purchased 49 homes, contributing to approximately 37 per cent of the purchases made. This is significantly lower than the 100 luxury homes purchased in 2011, which contributed to 47 per cent of luxury homes purchased last year.

The remaining 27 per cent of luxury-home transactions were made by Singapore permanent residents and companies who purchased 32 and four luxury homes so far this year respectively.

Luxury home prices, which have fallen 2.0 per cent over the past three quarters, also stabilised in Q3, in part due to increased purchases by local buyers. The average price per square foot (psf) for Q2 and Q3 remained the same at $2,621.

"This shows that there is underlying demand from cash-rich local buyers who have been waiting at the sidelines for more attractive pricing," DTZ said in a release.

Luxury homes are defined as non-landed projects with most units larger than 2,000 sq ft in size and generally costing more than $2,500 psf.

The report also found that landed homes continued to lead the price increase as buyers found more value in the larger floor areas and are driven by the scarcity fear factor that prices will rise beyond their reach.

Average resale prices of freehold landed homes in the prime districts rose by 1.2 per cent in Q3, higher than the 1.0 per cent rise in Q2. In the suburban areas, prices rose even more, by 2.4 per cent on average, double the 1.2 per cent increase in Q2.

Prices of freehold apartments/condominiums in the prime districts of 9, 10 and 11 as well as in the suburban areas also rose in Q3 by 1.0 per cent.

"The stronger increase in the freehold segment is due to the closing gap between mid and higher-end resale units and new units in the mass market, as more buyers are finding that these resale units offer better value and generally have bigger floor areas than the new ones," said Chua Chor Hoon, DTZ's head of Asia Pacific research.