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Thread: 7 signs of a property slowdown

  1. #1
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    Default 7 signs of a property slowdown

    April 6, 2008

    PROPERTY

    7 signs of a property slowdown

    Buyers seem to be gaining ground again in the private homes market but consultants say it's far from crashing yet

    By Joyce Teo, Property Correspondent


    After rocketing to dizzying heights last year, the private homes market has stalled because of the global credit crunch - an external factor that took the market by surprise.

    The withdrawal of the deferred payment scheme last year has also dampened demand somewhat.

    Sales volumes and interest have fizzled out just as quickly as the market surged last year.

    While many players hang on to the notion that strong fundamentals - low interest rates, for instance - will support the market, sentiment has fast melted away.

    Is the property market slowing to a crawl? We examine the mounting evidence.

    1 Growth in home prices weakens

    The Urban Redevelopment Authority's (URA's) early estimate of first-quarter data showed a 4.2 per cent rise in private home prices against 6.8 per cent in the previous quarter and 31 per cent last year.

    Consultants expect price growth to weaken. Prices, especially for high-end homes, might fall but not significantly as sellers are still reluctant to accept lower prices, said a seasoned property agent. 'There's no urgency to do so.'

    2 Launches are held back

    Developers have ample properties to sell but most continue to hold back launches. Some small ones have gone ahead but the response has been unimpressive.

    With buyers and sellers choosing to remain on the sidelines as the global impact of a slowing United States economy remains uncertain, the market is largely quiet.

    URA data showed that only 185 new private homes were sold in February, down from 328 in January. Last year, developers sold 14,811 new homes.

    3 Collective sales have died down

    This market is dead, for now at least, as developers stay away and new rules make it tougher for owners to sell en bloc.

    So far this year, only one sale has been done compared with 26 in the first quarter of last year.

    And one potential sale - that of Makeway View in Newton - was cancelled after the buyer, Bravo Building Construction, said it had found out that it would have to pay a higher-than-expected development charge.

    Owners of some estates are starting to lower their price expectations.

    Pinetree Condominium in Balmoral Park, for instance, was recently relaunched at a lower indicative price of $128 million - down from around $145 million last September, but still well above the 2006 price tag of $59 million.

    4 Investor funds pull out or hold off

    Islamic investment bank Kuwait Finance House, which agreed last December to buy 97 Goodwood Residence units for $818.4 million from GuocoLand, allowed the purchase option to lapse.

    Both parties said last month that they were still in talks but did not provide clear reasons for the pullout. Industry sources had speculated that the fund's price - a record for the condo's area - was too high.

    A recent DTZ Research report said some funds are holding off making investments, at least for the first half of this year, until the extent of the US slowdown and its global impact become clearer.

    5 Sellers hand out discounts galore

    In the resale market, sellers are getting more flexible. There are more desperate sellers in the market this year, property agents said.

    Some want to sell one or two of their properties because they had bought some units under the deferred payment scheme, and payment is due in six months to a year, one agent said.

    For new launches or sales of new units, some developers are also willing to give discounts when asked, while others offer stamp duty rebates to attract buyers.

    6 Agents less sought after, ads dwindle

    Property agents have more free time and are taking out fewer advertisements because of the poor response.

    Last year, a seller's unit could be marketed by five to six agents, with the deal going to the agent who garnered the best price.

    But this year, a seller might go with one agent, said HSR Property Group's executive director, Mr Eric Cheng.

    On average, an ad for a reasonably priced unit could attract 12 to 15 calls last year. That is now down by half, he said. Prime, high-end homes have it worse, he added, noting that there could be no calls at all for some ads.

    'I have not been advertising since Nov 15 because I could see sales volume falling,' said agent Andrew Soh.

    7 Buyers toss in low bids to test the waters

    Some developers have offered rather low bids in recent land tenders, which signals a slowing property market.

    The Government in mid-March decided not to award a landed housing site in Jurong West as the bids were too low.

    Then, the lowest bid for a Yishun condo site came in at just $95 per sq ft of potential gross floor area.

    'The developers are pricing in the risks of falling prices,' said Knight Frank's director for consultancy and research, Mr Nicholas Mak.

    'Given thin volume, they could also be hoping that there is no competition.'

    Going forward, optimistic players are waiting for the market to regain some of its former glory in the next six months.

    The pessimistic ones are prepared to ride out the whole year and possibly the next.

    'If volume remains thin, there is a chance that private home prices might weaken this year, but the market is not expected to crash,' said Mr Mak.

    [email protected]

  2. #2
    Unregistered
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    Default Re: 7 signs of a property slowdown

    You will commit the 7 deadly sins if you believe in these.

  3. #3
    Unregistered
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    Default Re: 7 signs of a property slowdown

    The writing was on the wall a long, long time ago.

  4. #4
    Unregistered
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    Default Re: 7 signs of a property slowdown

    Quote Originally Posted by Unregistered
    The writing was on the wall a long, long time ago.

    Sorry, what was the writing and how long time ago?

  5. #5
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    Default Re: 7 signs of a property slowdown

    Quote Originally Posted by Unregistered
    Sorry, what was the writing and how long time ago?
    Crash has arrived.

  6. #6
    Unregistered
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    Default Re: 7 signs of a property slowdown

    Quote Originally Posted by mr funny
    April 6, 2008

    PROPERTY

    7 signs of a property slowdown

    Buyers seem to be gaining ground again in the private homes market but consultants say it's far from crashing yet

    By Joyce Teo, Property Correspondent


    After rocketing to dizzying heights last year, the private homes market has stalled because of the global credit crunch - an external factor that took the market by surprise.

    The withdrawal of the deferred payment scheme last year has also dampened demand somewhat.

    Sales volumes and interest have fizzled out just as quickly as the market surged last year.

    While many players hang on to the notion that strong fundamentals - low interest rates, for instance - will support the market, sentiment has fast melted away.

    Is the property market slowing to a crawl? We examine the mounting evidence.

    1 Growth in home prices weakens

    The Urban Redevelopment Authority's (URA's) early estimate of first-quarter data showed a 4.2 per cent rise in private home prices against 6.8 per cent in the previous quarter and 31 per cent last year.

    Consultants expect price growth to weaken. Prices, especially for high-end homes, might fall but not significantly as sellers are still reluctant to accept lower prices, said a seasoned property agent. 'There's no urgency to do so.'

    2 Launches are held back

    Developers have ample properties to sell but most continue to hold back launches. Some small ones have gone ahead but the response has been unimpressive.

    With buyers and sellers choosing to remain on the sidelines as the global impact of a slowing United States economy remains uncertain, the market is largely quiet.

    URA data showed that only 185 new private homes were sold in February, down from 328 in January. Last year, developers sold 14,811 new homes.

    3 Collective sales have died down

    This market is dead, for now at least, as developers stay away and new rules make it tougher for owners to sell en bloc.

    So far this year, only one sale has been done compared with 26 in the first quarter of last year.

    And one potential sale - that of Makeway View in Newton - was cancelled after the buyer, Bravo Building Construction, said it had found out that it would have to pay a higher-than-expected development charge.

    Owners of some estates are starting to lower their price expectations.

    Pinetree Condominium in Balmoral Park, for instance, was recently relaunched at a lower indicative price of $128 million - down from around $145 million last September, but still well above the 2006 price tag of $59 million.

    4 Investor funds pull out or hold off

    Islamic investment bank Kuwait Finance House, which agreed last December to buy 97 Goodwood Residence units for $818.4 million from GuocoLand, allowed the purchase option to lapse.

    Both parties said last month that they were still in talks but did not provide clear reasons for the pullout. Industry sources had speculated that the fund's price - a record for the condo's area - was too high.

    A recent DTZ Research report said some funds are holding off making investments, at least for the first half of this year, until the extent of the US slowdown and its global impact become clearer.

    5 Sellers hand out discounts galore

    In the resale market, sellers are getting more flexible. There are more desperate sellers in the market this year, property agents said.

    Some want to sell one or two of their properties because they had bought some units under the deferred payment scheme, and payment is due in six months to a year, one agent said.

    For new launches or sales of new units, some developers are also willing to give discounts when asked, while others offer stamp duty rebates to attract buyers.

    6 Agents less sought after, ads dwindle

    Property agents have more free time and are taking out fewer advertisements because of the poor response.

    Last year, a seller's unit could be marketed by five to six agents, with the deal going to the agent who garnered the best price.

    But this year, a seller might go with one agent, said HSR Property Group's executive director, Mr Eric Cheng.

    On average, an ad for a reasonably priced unit could attract 12 to 15 calls last year. That is now down by half, he said. Prime, high-end homes have it worse, he added, noting that there could be no calls at all for some ads.

    'I have not been advertising since Nov 15 because I could see sales volume falling,' said agent Andrew Soh.

    7 Buyers toss in low bids to test the waters

    Some developers have offered rather low bids in recent land tenders, which signals a slowing property market.

    The Government in mid-March decided not to award a landed housing site in Jurong West as the bids were too low.

    Then, the lowest bid for a Yishun condo site came in at just $95 per sq ft of potential gross floor area.

    'The developers are pricing in the risks of falling prices,' said Knight Frank's director for consultancy and research, Mr Nicholas Mak.

    'Given thin volume, they could also be hoping that there is no competition.'

    Going forward, optimistic players are waiting for the market to regain some of its former glory in the next six months.

    The pessimistic ones are prepared to ride out the whole year and possibly the next.

    'If volume remains thin, there is a chance that private home prices might weaken this year, but the market is not expected to crash,' said Mr Mak.

    [email protected]
    According to quite a few "experts" on this board the cannons are still booming. I just hope they are not confusing it with the big thuds of speculators jumping from high rises.

  7. #7
    Unregistered
    Guest

    Default Re: 7 signs of a property slowdown

    Why so many people have sudden reaction to this news and say its not true?
    The reason simple. THEY STREZZZ LIAO. Nobody buy and start to bullsh1t again.

  8. #8
    Unregistered
    Guest

    Default Re: 7 signs of a property slowdown

    Quote Originally Posted by Unregistered
    According to quite a few "experts" on this board the cannons are still booming. I just hope they are not confusing it with the big thuds of speculators jumping from high rises.
    You are right. The thuds are echoing throughout the island as they rush for the exits. Many are being trampled. The thuds would get softer as they land on fellow speculators rushing for the exits.

  9. #9
    Unregistered
    Guest

    Default Re: 7 signs of a property slowdown

    Quote Originally Posted by Unregistered
    According to quite a few "experts" on this board the cannons are still booming. I just hope they are not confusing it with the big thuds of speculators jumping from high rises.
    And also MRT..........................

  10. #10
    Unregistered
    Guest

    Default Re: 7 signs of a property slowdown

    The sour grapes have been predicting the "crash" since last July, when the sub prime started.

    But according to latest statistics, the residential price index has gone up 6.6% in Q4 2007 and another 4.2% in Q1 2008.

    Now is April 2008, in another 3 months, we will celebrate "US sub prime" anniversary.

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