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Thread: Home sales hit new highs on silent buying frenzy

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    Default Home sales hit new highs on silent buying frenzy

    http://www.businesstimes.com.sg/sub/...41959,00.html?

    Published July 16, 2009

    Home sales hit new highs on silent buying frenzy

    Developers sold more units in June than in 2007 peak but the momentum may not last

    By UMA SHANKARI


    (SINGAPORE) The buying frenzy in Singapore's property market has now eclipsed even the dizzy heights of the last property boom. Developer sales of new private homes in June hit 1,825 units - topping the previous peak of 1,723 units homes sold in August 2007 at the property market peak.

    But analysts are unsure if the buying momentum can continue for much longer.

    June marks the fifth straight month where the number of transactions has exceeded 1,000. To capitalise on the bullish sentiment, developers increased supply by 41 per cent month-on-month to launch 1,637 units in June.

    In the first half of 2009, developers sold more than 7,300 units in all. If this momentum is sustained, new home take-up for the full year will exceed 14,000 units.

    That figure could be met, some analysts said. In 2007, a record 14,811 units were sold, in what one analyst said was 'the climax of the bull run in terms of sales volume'. CB Richard Ellis (CBRE), for example, said that it is likely that the whole year's new home take-up will be around 12,000-14,000 units.

    But others are more doubtful. DBS Vickers analyst Adrian Chua expects developers to sell just 9,000 new homes in 2009. That figure is itself an upgrade from his previous assumption of 6,000 units.

    Colliers International's director for research and advisory Tay Huey Ying noted that June's record number of primary home sales is driven by pent-up demand from both owner- occupiers and investors, and was also helped by the fact that home prices remained largely at a discount from their peaks despite recent signs of strengthening. Official data shows that private home prices fell 14.1 per cent in Q1 2009 and another 5.9 per cent in Q2.

    'As the primary market is perceived to have bottomed, people have rushed in to buy ahead of sharp price increases and the Hungry Ghosts Month,' Ms Tay said. 'Nevertheless, buyer sentiment and buying momentum remain susceptible to downside risks as well as runaway home prices as buyers remain price-sensitive, given the lack of economic and income growth.'

    But analysts are encouraged by two factors: firstly, the fact that the high-end market seems to be picking up. Colliers' analysis showed that some 11 units were transacted at more than $2,500 per square foot (psf) in June, up from just three units in May. By contrast, no new homes were sold for more than $2,500 psf in the first four months of the year.

    In addition, the $3,000 psf mark was breached as well. UOL managed to sell one unit at Nassim Park Residences at $3,813 psf, which is the high watermark price for the year so far. A unit in the Ritz-Carlton Residences was sold at $3,404 psf while another in The Orchard Residences was sold for $3,299 psf. In fact, seven units at The Orchard Residences were sold in the price range of $2,700-$3,299 psf.

    The trend, at least, looks set to continue in July. Analysts said that several other luxury units have also changed hands so far this month.

    And, secondly, some are optimistic as this rally is a bottom-led recovery, which analysts said should be more sustainable than the previous boom. The 2006-07 run-up was led by investment interest in the high-end segment.

    'This time, mass market projects (supported by the relative stability of the HDB resale market, which is still seeing limited supply) are driving the market bottom- up,' said DBS Vickers' Mr Chua. 'Also, smaller units continue to be snapped up first, in contrast to the penthouses and larger units in the 2006-07 run-up. We believe the current run-up is still largely premised on affordability (with investment interest skewed towards rental yields) whereas the 2006-07 run-up was based on an investment interest premised on capital appreciation and the luxury scarcity factor.'

    And there still appears to be support at the bottom. According to an analysis by Jones Lang LaSalle (JLL), the price gap between non-prime residential projects and HDB resale flats has come off from the peak of 67 per cent in 2007 to a low of 54 per cent in 2009. 'In our opinion, the narrower price gap is a major factor behind the bullish sentiment, especially among HDB upgraders. As long as this gap remains tight, this stream of HDB upgraders into the private residential market is likely to continue,' says Chua Yang Liang, JLL's head of research for South-east Asia and Singapore.


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    http://www.straitstimes.com/Prime%2B...ry_403627.html

    July 16, 2009 Thursday

    Record private home sales

    1,825 sold in June even higher than during peak of the boom in Aug 2007

    By Joyce Teo, Property Correspondent


    IT WAS another electrifying month for the private home market, with sales last month surpassing even levels seen at the height of the boom two years ago.

    The recession-defying numbers for yet another month point to surging confidence among buyers and sellers, and signal that the worst is likely over.

    Developers sold 1,825 units last month, up from the 1,673 moved in May and almost 100 more than the number shifted in August 2007, the peak of the boom.

    Even more remarkable, the April to June sales of 4,714 units surpassed the total of 4,264 new private flats sold last year, said CB Richard Ellis.

    It felt like the good old days were back for developers last month, with 1,637 units launched, 475 more than in May, Urban Redevelopment Authority data showed yesterday.

    That was the second highest number of launches since August 2007.

    Values are also responding to the heightened activity, with median prices at some projects last month higher than in May.

    Property consultants cite the continued strong demand since February and June's record sales to tip that the worst appears to be over. Some also expect a price recovery soon.

    Colliers International's Tay Huey Ying reckons that last month's record number of primary home sales was driven by pent-up demand from both owner-occupiers and investors. This was helped by prices that remained largely at a discount from peak prices, even if they may have strengthened recently.

    Knight Frank chairman Tan Tiong Cheng said the market had been shell-shocked for a period and sales fell off a cliff last year, but the perception now is that the worst is over.

    'Although it may still take a while for the economy to find its feet, as the Government has suggested, buyers are now prepared to make a decision,' he said.

    'They feel that this is a window to buy. Interest rates are at the lowest ever, and there is a good selection of condos out there. Things are not getting better, but they are not getting worse.'

    CBRE Research executive director Li Hiaw Ho added: 'While 2007 was the climax of the bull-run in terms of sales volume, 2009 likely represents the turning point at the trough of the market.'

    If the buying momentum is sustained and the economy strengthens gradually, the take-up for the whole year could reach up to 14,000 units, higher than the 2006 level of 11,147 units, he said. Sales in 2007 were a record 14,811 units.

    The sales drive could also send prices up from a low in the second half of the year, added Mr Li.

    City-fringe homes were the most popular last month, with 867 sold, including the 330-unit [email protected] in Woodleigh Close, which sold out at a median price of $804 per sq ft. The only sell-out project in June, its small, affordable units were a key attraction, experts said.

    Large units are generally moving slower than the small ones, they said, due to the higher quantum price.

    The return of interest in high-end deals priced above $2,000 psf was also noted last month, said CBRE Research.

    A unit in the Ritz-Carlton Residences went for $3,404 psf, while one in The Orchard Residences was sold for $3,299 psf.

    These made up the 23 high-end deals last month, up from 15 in May. That is still a very small number, but 'a sign that there are high net worth individuals out there who are prepared to buy investment-grade properties despite uncertainties in the economy', said Mr Li.

    Jones Lang LaSalle said it was starting to see a return of interest from foreigners seeking opportunistic buys.

    The narrower price gap is a major factor behind the bullish sentiment, especially among HDB upgraders, said Dr Chua Yang Liang, the firm's head of research for South-east Asia and Singapore.

    Its number-crunching shows that the price gap between non-prime residential projects and HDB resale flats are now similar to 2004.

    'As long as this gap remains tight, this stream of HDB upgraders into the private residential market is likely to continue,' he said.

    Nevertheless, these buyers are very price-sensitive. 'There is some upward price movement, but there is no shortage of supply,' said one expert.

    DTZ's head of South-east Asia research, Ms Chua Chor Hoon, added: 'As the economy has not recovered, and many have taken pay cuts or were retrenched, demand, especially in the mass-market segment, is likely to be sensitive to price increases.'

    [email protected]
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