Resale prices up for private flats

2.5% rise in Sept from Aug, in sharp contrast to dip in new sales market

Published on Oct 06, 2012

By Amanda Tan

RESALE prices of non-landed private homes enjoyed some of their strongest gains in the past year last month, up 2.5 per cent from August.

This resurgence in the resale market was in contrast to the primary new sales market, where average prices fell 2.2 per cent, according to caveats lodged.

Property consultants noted that more home buyers are willing to buy resale units because of the option to stay in the property or rent it out immediately. Current low interest rates also help.

The data, released yesterday, is from the monthly Singapore Real Estate Exchange (SRX) Residential Property Flash Report. In quarterly terms, average resale prices rose by a strong 3.2 per cent in the third quarter to hit a historic high of $1,156 per sq ft (psf).

Homes across the board recorded their best showings in the past year though the sharpest rise was for the city fringe, or rest of central region (RCR), at 7.1 per cent.

It hit $1,199 psf in the latest quarter, up from $1,120 psf.

In the central region, resale prices averaged $1,738 psf, up a tad from $1,725 psf in the second quarter. Suburban homes inched up 0.75 per cent to $921 psf from $894 psf previously.

The rise in average rents also bears out this trend.

Overall rents rose to $3.87 psf a month in the third quarter, up from $3.76 psf monthly in the three months before.

The number of resale transactions in the third quarter, however, was 259 fewer than the quarter before.

On the fall in new home prices, Savills' research head Alan Cheong said the fall was not significant and that prices could rise in the next quarter as data from launches such as eCO is captured.

Rental yields for private flats stayed flat in the latest quarter at 4 per cent.

SRX collates and displays transactions by major property agencies, accounting for about 85 per cent of resale transactions.

Orange Tee's head of research and consultancy Tan Kok Keong said prices have held up because of healthy buyer interest.

"The external economy, while challenging, has not affected buyer sentiment too much over the past month... interest rates remain low and the injection of capital through the QE3 programme creates buyer confidence."

QE3 refers to the US central bank's money printing exercise to try to stimulate the economy.

Mr Tan expects resale prices to continue inching upwards in the next couple of months.

PropNex chief executive Mohamed Ismail noted more buyers are flocking to the secondary market because prices of new launches can be some 10 per cent higher.

"People pay a premium for new launches... And every time launch prices go higher, so do the values of resale flats that are underpriced," he said.

"As new launches create benchmark prices, buyers see more value in buying resale homes."

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