Slower rise in private home prices q-o-q in Q1

[reporter2]

http://www.straitstimes.com/premium/...march-20130430

Resale home prices rise marginally in March

Published on Apr 30, 2013

By Melissa Tan


RESALE home prices eked out a small rise last month, led by units in the central region.

They rose 0.9 per cent in March from the preceding month, a reversal from February's revised 1.2 per cent fall, according to figures from the Singapore Residential Price Index (SRPI) out yesterday.

Resale prices for apartments in the city area posted a 2.2 per cent increase in March from the preceding month, recovering from February's 3.7 per cent drop.

Shoebox units, which are small apartments measuring 506 sq ft or less, also posted a price increase of 0.7 per cent, after sliding 0.9 per cent in February.

Suburban apartments were the only category to see a drop in March. Their resale prices slipped by a marginal 0.1 per cent, after rising 1 per cent in the previous month.

The SRPI is compiled every month by the National University of Singapore, which monitors a basket of completed non-landed projects excluding executive condominiums.

Analysts said the price rise for resale homes in the city area does not indicate a sustained recovery in the category.

They added that resale suburban home prices likely dipped because a large volume of new launches in suburban areas last month drew buyers away from resale homes.

New home sales hit a record high of 2,793 units last month, mainly due to strong sales at suburban projects such as D'Nest in Pasir Ris and Urban Vista in Tanah Merah, according to Urban Redevelopment Authority (URA) data out two weeks ago.

The seventh round of cooling measures, which took effect on Jan 12, also dampened buying sentiment for city-fringe and suburban homes, due to an increase in the additional buyer's stamp duty for buyers who already own one or more private homes.

"Many investors have adopted a wait-and-see attitude due to the cooling measures... Buyers can afford to be more picky," said ERA Realty key executive Eugene Lim.

R'ST Research director Ong Kah Seng said that some investors may also be more hesitant to buy resale units in suburban areas, where the level of rental demand from expatriates is untested. Mr Ong added that the increase in resale prices in the central region was not a sign of optimism, merely a recovery from dampened sentiment of the prior month.

"There is still a significant unsold supply of completed and under-construction units in the central area, pointing to a possible supply overhang," he noted.

As for shoebox units, Mr Ong said that shoebox owners who are not in a hurry to cash out are holding on to them for better prices.

With the new rule limiting the number of shoebox units a developer can build on suburban sites, which took effect last November, there will be fewer choices for such units, he added.

Mr Lim said that resale volumes are expected to decline moderately for the next few quarters due to the effect of the cooling measures and an increasing supply of private homes.

An estimated all-time high of 18,400 new private homes, including executive condo units, are set to be completed this year, according to URA data last Friday.

Some completions expected for the rest of the year include CapitaLand's The Interlace in Alexandra Road, with 1,040 units, and the 616-unit Waterbank at Dakota.

[email protected]

[reporter2]

http://www.businesstimes.com.sg/arch...-q-q1-20130427

Published April 27, 2013

Slower rise in private home prices q-o-q in Q1

But prices in the industrial, office and shop segments surge

By Kalpana Rashiwala


PRIVATE home prices in the first quarter rose just 0.6 per cent from the previous quarter, compared with the 1.8 per cent increase in Q4 2012. However, it was the opposite story for prices of industrial, office and shop space, which spurted ahead.

Analysts say the slower pace of increase in private home prices attests to the efficacy of the January cooling package. This helped to divert investor interest to the non-residential sectors, particularly the office and retail property markets, which were left untouched by the January measures. This explains the acceleration in these segments in Q1, going by latest data from Urban Redevelopment Authority (URA).

However, what may have surprised some observers is a 4.5 per cent quarter-on-quarter (q-o-q) rise in URA's All Industrial price index for Q1, against a fall of 0.7 per cent in the fourth quarter of last year.

The volume of strata industrial units transacted actually fell 51.4 per cent q-o-q, according to Colliers' analysis of caveats data. But it was what got transacted that probably drove up prices. The proportion of transactions involving freehold/999-year leasehold industrial properties (which have higher values) leapt from 11 per cent in Q4 to 24 per cent in the first quarter.

URA's price index for multiple-user warehouse space jumped 10.6 per cent q-o-q in the first quarter, after climbing 9.4 per cent in Q4 - due to limited supply in this segment. For multiple-user factory space, the price index appreciated 2.9 per cent in Q1, reversing a 2.7 per cent drop in Q4.

"There could be further policy risks," acknowledged Chia Siew Chuin, director of research and advisory at Colliers.

The price index for office space rose at a faster clip of 2.1 per cent q-o-q, after inching up 0.3 per cent in Q4.

The launch of strata office units at SBF Center along Robinson Road/Cecil Street helped to spur transactions in this segment. The positive sentiment also rubbed on to strata offices in projects released earlier such as Oxley Tower, Robinson Square, Eon Shenton, Centropod@ Changi, Wis@Changi and Paya Lebar Square, as well as completed projects such as Samsung Hub, where benchmark prices have been set lately.

URA's price index for shop space appreciated 2.1 per cent in Q1 after dipping 0.2 per cent in the previous quarter, probably boosted by robust sales of strata retail units at Alexandra Central at $4,000-$8,000 psf.

In the private housing segment, URA's indices show slower price increases in both landed and non-landed segments. More supply is coming onstream. Some 16,742 private homes are projected to receive Temporary Occupation Permit (TOP) this year (including 2,667 units that were completed in Q1) - a 62 per cent jump from last year's figure of 10,329 units. The projected completions for this year will surpass the previous high of 14,582 units in 1997.

The numbers may touch 18,600 units next year, 21,000 in 2015 and 25,000 in 2016 - based on expected project completion dates reported by developers to URA.

The increase in property tax rates particularly for high-end investment residential properties, along with the removal next year of the property-tax refund concession for vacant properties, could add to the pressure for owners to lower rents, say analysts.

"On the ground, we see that tenants are now spoilt for choice," said International Property Advisor CEO Ku Swee Yong.

"The market may be confused. While we are concerned about the very large completions coming on stream, there is also positive data on demand - such as higher occupancy and median per square metre rentals."

Another analyst said: "The big question is: Of the units that will be completing, how many were bought for owner occupation, how many for leasing out, and how many with the aim of selling them off around the project's TOP period? That will determine the impact on rents, vacancies and prices."

Singapore's economic performance and immigration policy could also be factors, she said.

URA's overall private residential rental index rose 0.8 per cent q-o-q in the first quarter, a tad higher than the 0.7 per cent increase in Q4 2012. The vacancy rate for private homes dipped to 5.2 per cent at end-Q1 from 5.4 per cent three months earlier.

CBRE executive director (residential) Joseph Tan said there were 7,676 private residential leasing deals contracted in the first quarter - down 33 per cent from 11,472 deals in Q4, but suggested that some of those who used to rent homes could have bought and moved into their own homes.

Developers sold 5,412 private homes in Q1 this year, higher than the 4,353 units in Q4 last year but lower than 6,526 units in Q1 last year. CBRE predicts that for the whole of this year, developers will sell around 16,000-18,000 private homes - down from last year's record 22,197 units.

While the primary market was buoyant in Q1, the number of completed private homes that changed hands in the resale market nearly halved from 3,447 units in the fourth quarter to 1,871 units in Q1.

[reporter2]

http://www.businesstimes.com.sg/spec...march-20130430

Published April 30, 2013

Non-landed private home prices up 0.9% in March

Rise driven by 2.2% rise in March in sub-index for Central Region

By Mindy Tan


PRICES of completed private apartments and condominiums rose marginally in March, reversing February's drop, according to the latest flash estimate from the National University of Singapore (NUS).

NUS's overall Singapore Residential Price Index (SRPI), which tracks prices of completed non-landed private homes, excluding executive condos, rose 0.9 per cent in March, after dipping 1.2 per cent in February.

This was driven mainly by the sub-index for Central Region (excluding small units), which rose 2.2 per cent in March, against a 3.7 per cent slide in February.

NUS's Institute of Real Estate Studies (IRES), which minted the SRPI series, defines Central Region as Districts 1-4 (including the financial district and Sentosa Cove) and the traditional prime residential districts of 9, 10 and 11.

The increase, though significant, should be seen as a sign of stability or recovery of dampened sentiments instead of renewed optimism for central region properties, said Ong Kah Seng, director at R'ST Research.

"There is still significant unsold supply of completed and under-construction units, pointing to possible supply overhang," he added.

According to caveats lodged, there were 106 non-landed resale transactions in the central region (excluding small units), up from 67 such transactions in February. A total of 238 transactions were logged in January.

The Non-Central Region sub-index (excluding small units) on the other hand was firm, dipping 0.1 per cent month-on-month in March, following a one per cent gain in February.

This could be due to investors adopting a wait-and-see attitude following the cooling measures, particularly those interested in units in the city fringe areas, said Eugene Lim, key executive officer at ERA Realty Network. In addition, the large number of launches in the areas outside the Central Region means that buyers can afford to be more picky, he said.

While this may have drawn buyers away from the resale market, the price index clearly indicates the resilience of buyer's interest in suburban resale homes.

Indeed, demand for non-central condos should continue as there is pent-up demand from first-time buyers, said Mr Lim, adding that demand is anticipated to slow down in the luxury market and shift to the mass market segment.

Separately, the sub-index for prices of completed small apartments and condo units (up to 506 sq ft) islandwide rose 0.7 per cent in March, reversing a dip of 0.9 per cent in February.

A total of 17 non-landed resale transactions for small apartments were logged in March, up from seven in February, which dipped from 21 such transactions in January.

Taken on a year-on-year basis, prices of resale non-landed homes rose 7.4 per cent. Homes in the Non-Central Region rose the most, at 10.9 per cent year-on-year. Units in the Central Region rose 3.4 per cent. Small units islandwide posted a 9.9 per cent increase in prices.

[reporter2]

http://www.businesstimes.com.sg/spec...sales-20130430

Published April 30, 2013

Non-landed private home owners profit from resales

By benjamin aw


A TOTAL of $107 million in gross profit was pocketed by non-landed private home owners from quick resales over the five quarters of Q1 2012 to Q1 2013, according to a report released by real estate firm OrangeTee.

Noting that the property market has "rebounded very strongly", the report added that high property prices - the overall private residential price index is now 60 per cent above the trough in 2009 - contributed largely to the profit in this sector, which includes private condominiums and apartments but excludes Housing and Development Board (HDB) executive condominiums.

"In the current bull run, newly completed homes that were resold upon receipt of Temporary Occupation Permit (TOP) yielded good returns for purchasers," said the report.

Between Q1 2012 and Q1 2013, a total of 103 projects obtained TOP, according to data from the Urban Redevelopment Authority (URA) and the Building and Construction Authority (BCA). Out of these, 68 projects had transactions in the same quarter upon completion, making up a total of 348 transactions.

Only one out of the 348 transactions was unprofitable, which the report describes as a "one-off occurrence".

The report also highlighted that, over the same period, each newly completed unit yielded an average return of 33 per cent. The most profitable non-landed private residential segment was the Outside Central Region (OCR), which made an average profit of 41 per cent, compared to 31 per cent for the Rest of Central Region (RCR) and 25 per cent for the Core Central Region (CCR).

In all three regions, however, shoebox units, measuring 50 sq m or less, were less profitable than their non-shoebox counterparts.

Said the report: "Contrary to common belief, profitability of shoebox units underperformed the general market across all segments. Average profitability per unit was $132,000 or 25 per cent in the last five quarters, lower than that of the overall market."

Over the last five quarters, average gross profitability peaked at Q3 2012, when owners saw an average return of 43 per cent per unit. However, since then, average profitability has been falling as the rate of appreciation in private home prices moderated, and such profitability may not be repeated in the future, said the report.

"As the full effect of the cooling measures starts to sink in, profitability from reselling uncompleted properties upon project completion is expected to moderate in the coming quarters," the report added, advising owners to "exercise some caution" when investing in the property market.

Ultimately, the report expressed optimism for the future of the market, referring to sustained foreign capital inflow, low interest rates, and "record land prices" in recent Government Land Sales (GLS).

"We expect that demand for private housing market will remain strong."