http://www.businesstimes.com.sg/prem...hills-20130116

Published January 16, 2013

After year of history, property market braces for the chills

All eyes on preview of Q Bay Residences as suburban homes could hold the key

By Kalpana Rashiwala


[SINGAPORE] Numbers just in show that the property market made history in 2012, with developers selling a record 22,290 private homes, excluding executive condos. The tally, which shattered the previous record of 16,292 units in 2010, was boosted by brisk sales in December when developers offloaded 1,410 units.

But history is unlikely to repeat itself in the wake of last Friday's cooling measures which target investment demand, even by Singaporeans, in addition to foreign buying.

A telling find from the Urban Redevelopment Authority's December numbers is the relatively small contribution from Outside Central Region (OCR)-home to mass-market condos - to both developers' launches and sales last month.

Ong Teck Hui, national director (research and consultancy) at Jones Lang LaSalle, highlighted that of the 1,410 private homes excluding ECs sold in December, OCR's share was 620 units or 44 per cent - the lowest monthly sales quantum and proportion for the region in 2012. In contrast, for the first 11 months of 2012, OCR sales averaged 1,441 units or 75 per cent of the total.

Similarly, of the 1,011 private homes excluding ECs launched last month, only a quarter or 248 units were in OCR - also the lowest monthly figures on both counts for the region last year. In contrast, the average monthly launch and proportion for the preceding 11 months were 1,355 units and 66 per cent respectively.

Curbs on housing loan tenure announced in October could have hit new OCR launches last month, said Mr Ong. Most suburban projects tend to be large and launching them in the midst of uncertainty is risky, he explains. "In view of the latest measures announced on Jan 11, 2013, developers will have to be even more calculated in launching fresh projects in 2013 as setting the right price for launch can be tricky in this uncertain market. With a substantial portion of investment demand stripped out due to the latest measures, sales performance for OCR projects is unlikely to be as buoyant as before."

All eyes now are on response to this Friday's preview of Q Bay Residences, an OCR project at Tampines Avenue 10. A successful outcome could help set a positive tone, say market watchers. Though pricing has yet to be finalised, Cheang Kok Kheong, CEO of Frasers Centrepoint Homes, one of the project's three developers, said yesterday evening that the average price is likely to be in the $950-1,000 psf range net of all discounts. "Prior to Friday evening, we were looking at around $1,050 psf," he added.

This reflects the kind of price adjustment many property agents told BT could be necessary to interest buyers amid the harsher new rules.

Knight Frank's research and consultancy head Png Poh Soon predicts an up to 5 per cent price correction this year in the mid and mass-market segments, and a potential fall of 5-7 per cent in the high-end market.

SLP International executive director Nicholas Mak has downgraded his 2013 forecast for islandwide private home prices from a 3-6 per cent increase previously to a new range: -1 per cent to +4 per cent.

Property consultants' forecasts of developers' home sales (excluding ECs) this year vary widely, from around 12,000 to 20,000 units. This would be a 10-46 per cent drop from 2012, but even some of those predicting the higher end of the volume drop do not expect a steep price correction this year - citing continued high employment, low interest rates, and the relatively high prices many developers paid for their sites at state tenders last year, among other factors.

Developers last year also found buyers for a record 4,521 ECs, boosted by December's sales of 849 units, which was the highest monthly figure last year. The full-year EC sales number was up 56.8 per cent from 2011, while the December figure was 4.7 times that for the preceding month.

The two new EC launches in December - Citylife@Tampines and The Topiary - contributed to a whopping 1,214 units being launched, or nearly 55 per cent of the 2,225 total homes developers released in December. CityLife@Tampines saw 452 units being sold in December at a median price of $812 psf. At The Topiary in Seletar, 288 units found buyers at a $737 psf median price.

Excluding ECs, December's top-selling project was City Developments' Echelon condo near Redhill MRT, where 331 units changed hands at a median price of $1,768 psf.

In all, developers rolled out 21,487 private homes excluding ECs across Singapore in 2012, up 21.3 per cent from 2011. DTZ's launch forecast for this year is 18,000-20,000 units. "There are more than 10,000 units from Government Land Sales (GLS) sites that have been awarded but not launched from the 2011 and 2012 GLS Programmes. On top of that, we will have additional units from sites sold in H1 2013, as well as from private sites," says DTZ's Asia Pacific research head Chua Chor Hoon.

Developers are unlikely to hold back launches as they have to stick to project completion deadlines. "Cooling measures are also getting more aggressive, hence developers may reckon that a better strategy is to sell as fast as they can rather than hold - unless they have no time or cost constraints."