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Thread: In dollar terms, '09 home sales pale before record of '07

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    Default In dollar terms, '09 home sales pale before record of '07

    http://www.businesstimes.com.sg/sub/...56892,00.html?

    Published October 30, 2009

    In dollar terms, '09 home sales pale before record of '07

    Volumes may be as high, but units sold this year are smaller and less expensive

    By KALPANA RASHIWALA


    (SINGAPORE) Numbers tell only half the story. While developers are heading towards the record number of private homes sold in 2007, CB Richard Ellis says that the total transaction value of primary market sales in 2009 so far - at about $11.2 billion - is only about half the $23 billion worth of new homes sold in the peak year of 2007.

    The smaller value of total private homes sold by developers this year reflects the fact that mass-market homes have hogged the limelight this year, unlike 2007, when the spotlight was on the luxury market.

    Median prices per unit transacted, both in absolute dollar as well as per square foot terms, have also been lower this year compared with 2007. With the focus on small-format units to move sales, the median size of units sold so far this year is also smaller than in 2007.

    CBRE based its analysis on caveats data captured up to Oct 27 in Urban Redevelopment Authority's Realis system.

    This year, the strongest quarterly showing was in Q3, when developers sold about $5.8 billion worth of private homes, up from $1.36 billion in Q1 and $4.05 billion in Q2.

    This pick-up has much to do with the stages of recovery in home buying.

    'The buying momentum started in the mass market in the first quarter before filtering to the mid segment in Q2. It was only in Q3 that developers started rolling out their higher-priced projects - not just in the Core Central Region but in the suburbs,' notes Knight Frank executive director Peter Ow.

    DTZ executive director Ong Choon Fah reckons the total value of homes sold by developers is likely to slow again in the current quarter, due to a seasonal effect of the year-end holiday period combined with a quieter market after the government's cooling measures last month.

    Agreeing, Mr Ow says: 'Developers are also likely to hold off launching projects for the rest of this year, in the hope of getting higher prices again in 2010, when the opening of the two integrated resorts is expected to create another wave of activity in the market.'

    CBRE's analysis showed that the median quantum per unit sold by developers so far this year was $930,000, about 21 per cent lower than the $1.18 million for full-year 2007.

    In per square foot terms, this year's median price of $863 was 7 per cent below the $928 for 2007.

    The most expensive private home in the primary market sold this year was a third-floor apartment at Seven Palms Sentosa Cove which fetched $13.89 million.

    In 2007, the priciest sale was that of a 19th-floor unit at The Marq On Paterson Hill which sold for $31.40 million. Both projects are by SC Global.

    According to caveats data, in per square foot terms, the most expensive unit sold by a developer so far this year was $4,099 psf for a 43rd-floor apartment at The Orchard Residences, compared with the $5,262 psf for a 16th-floor apartment at The Marq in 2007.

    However, this is not the record price. That was set in October 2007 when the developer of The Orchard Residences sold a 53rd-level penthouse for $5,600 psf - although a caveat does not appear to have been lodged for this transaction.

    Another finding from CBRE's analysis is a reduction in median size of units sold by developers from 1,292 sq ft in full-year 2007 to 1,206 sq ft this year.

    The Urban Redevelopment Authority's survey of developers shows they sold 12,828 private homes in the first nine months of 2009. This means they will have to sell 1,983 units in the current quarter to match 2007's full-year record of 14,811 units.

    'The current good performance of 2009, a recession year no less, does not show the same characteristics of the previous residential boom of 2007,' observed CBRE executive director Li Hiaw Ho.

    'In 2007, the luxury end of the residential market achieved top-line record prices with units that were more often than not large in size. Unit sizes were often greater than 2,000 sq ft. Much of the demand came from the luxury segment where the overall price quantums were high,' he noted.

    In contrast, much of 2009's demand has been for mass-market homes positioned for HDB upgraders. 'The proliferation of small-format homes of less than 500 square feet has also led to relatively lower price quantums, compared with that of 2007,' Mr Li noted.

    Another difference between the years 2007 and 2009 is a drop in the number of foreign buyers.

    'In 2007, 1,736 foreigners bought private homes in the primary market. However, in 2009 to date, only 651 foreign purchasers have bought new homes,' CBRE said.


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    http://www.straitstimes.com/Money/St...ry_448214.html

    October 30, 2009 Friday

    Home sales: Boom with a difference

    Number of new private homes sold may hit 2007 record but value only half

    By Joyce Teo, Property Correspondent


    PROPERTY developers here appear set to sell at least as many new homes this year as in the record year of 2007.

    But the total value of these new private homes is on track to be only about half of that two years ago, underlining how different the two property booms have been.

    This shift is partly thanks to a dramatic rise in sales of smaller, mass market units, says a new analysis by CBRE Research.

    The running total for units sold in the first three quarters of this year is 12,828 compared to 2007's 14,811 - so even average sales for the final three months will take this year's total close to that of 2007.

    The total value of new homes sold two years ago was $23.04 billion, based on caveats lodged. In comparison, the total from January to the first week of October this year was $11.2 billion - just 48.6 per cent of 2007's record.

    This is because back in 2007, the luxury end of the residential market achieved top-line record prices with units that were usually large in size, said CBRE Research executive director Li Hiaw Ho.

    'Unit sizes were often greater than 2,000 sq ft,' he said, adding that much of the demand came from the luxury segment where overall prices were high.

    This year, mass market homes positioned to attract HDB upgraders accounted for most of the demand, Mr Li pointed out. In addition, the proliferation of smaller homes of less than 500 sq ft - which have a lower total price - also helped to bring down the overall value.

    Developers were keen to ensure affordability this year as they scrambled to reconfigure their unit sizes to allow for smaller apartments.

    'Our high-end market has not started to move. It's the reverse of Hong Kong, where the property market picked up with the high-end segment,' said Mr Donald Han, managing director of Cushman & Wakefield. 'Luxury prices are generally 25 per cent below the peak of the market in the first quarter of 2008.'

    Another key difference between the previous boom year and this year is the number of foreigners buying into Singapore's private housing market, said CBRE Research.

    Two years ago, about 1,736 foreigners bought new homes in the primary market. A fair number were speculators who were not based here but were attracted to the Singapore growth story and the gains to be made in real estate.

    'Developers were doing a lot of road shows overseas then. We had buyers from Europe, Japan looking at huge penthouses, and the funds were buying,' said Mr Han.

    But, so far this year, only 651 foreigners have bought new homes, just a third or so of 2007's figure, said CBRE's Mr Li.

    Knight Frank executive director (residential) Peter Ow said that for much of this year, prices have been generally lower, which was why many buyers jumped in to buy.

    'The market in 2007 was also more speculative. In the first half-year of 2009, buyers were mostly owner-occupiers.'

    Although some speculators have returned to the market since then, this year's market is generally a lot more stable compared with 2007's, said Mr Ow.

    A total of 2,780 units was traded in the sub-sale market in the first three quarters of this year, compared with 4,193 units done in the first three quarters of 2007, according to data from the Urban Redevelopment Authority (URA).

    Price rises earlier in the year were fast and furious but the increases cooled somewhat after the Government's market-calming measures were introduced in mid-September, said Mr Ow.

    Some new private home prices are now high enough to cause buyers to think twice, he said.

    The breather is thus good as buyers need time to accept current prices and the fact that the low prices of the earlier part of this year are likely gone forever, he said.

    'Developers are not in a hurry to launch in view of rising land prices. There isn't a lot of supply coming up. While the land sales programme will have more land, it will take time for it to roll out,' said Mr Ow.

    Next year, gradual price rises are likely with the high-end market set to improve, said Mr Han.

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