Record home sale prices causing unrealistic seller expectations

By Daryl Loo, Channel NewsAsia | Posted: 18 June 2007 2027 hrs

SINGAPORE: The booming property market has led to record-breaking transactions being made almost every week.

While this may be seen as evidence of optimism in the property sector, some market-watchers say it may cause sellers to have unrealistic expectations for the value of their homes.

Private home prices have been on a steep uphill climb with the high-end luxury sector leading the pack.

And in recent weeks, several HDB units have hit record-breaking numbers.

A five-room flat in Jalan Membina went for S$675,000, while a unit in Kim Tian Place fetched S$720,000, smashing all previous records set for HDB five-room flats.

Tay Huey Ying, Director of Research, Colliers International, said: "The extreme increases in prices nowadays probably stem from some purchasers who may have already factored in en bloc premium or who have successfully sold their properties through collective sale and have reaped some windfall.

"My advice to potential purchasers is to study recent transactions very carefully and possibly disregard some of these exceptional sales transactions as they may not reflect the current condition."

Still, the property market continues on its heady ascent with news over the weekend that homeowners at The Ardmore stand to gain a whopping S$11 million each, following the en bloc sale of the property at over S$2,300 per square foot per plot ratio.

Pacific Mansion has also been put on the market, asking for an even higher price of S$2,400 per square foot per plot ratio.

While some of these high prices could turn out to be the exception rather than the norm, market watchers say they may cause home-sellers to ask for unrealistic prices.

Just three months ago, a 1,600 square foot unit at Cashew Heights changed hands for S$770,000. Now, a unit of the same size, that was put up for sale this month, is asking for nearly double of that amount.

Eric Cheng, Senior Division Director, PropNex, said: "Due to the recent record prices that have been set, most owners are expecting to set new records for their own units.

"It's the norm for homeowners to ask beyond the expected price because if they undersell their properties right now, it would be tough for them to get their hands on the next property. But if they overprice or if they are not realistic with their current price, they may not even conclude a deal."

Private home prices rose 4.8 percent in the first three months of this year and are predicted to go up as much as 25 percent for the full year.

- CNA/so