Jan 17, 2010

property special

2010: The year of luxury home sales & predictions Outlook

Experts see a shift from mass market sector, say big jumps in prices unlikely

By Fiona Chan

After the unexpected mid-recession housing boom last year, all eyes are now on whether the property market will continue to sprint ahead or if it will finally stop for a breather.

The answer, according to property consultants, is a bit of both.

While the private housing market is likely to maintain much of its strength this year, the huge jumps in prices and sales volumes will probably cool a bit.

Already, sales of new homes dropped off sharply in the fourth quarter of last year after the Government announced measures to cool the property market in September. Developers sold fewer than 2,000 units in the quarter, less than half of what they sold in the previous two quarters.

But Ngee Ann Polytechnic real estate lecturer Nicholas Mak believes the slowdown in sales volume towards the end of last year was a 'necessary pause for the market to take stock for further growth in 2010'.

'With so much liquidity in the market, asset prices - including those of property - are likely to benefit,' he said.

Colliers' director of research and consultancy, Ms Tay Huey Ying, expects the total number of private homes sold this year to hover around last year's volume of 33,000 units.

Sales in the secondary market, including sub-sales - resales of homes not yet built - will lead the pack, she said.

On the other hand, developer sales of new homes are likely to taper off from last year's booming 14,725 tally to a more sustainable level of 7,000 to 9,000 units.

'With demand expected to remain healthy, private home prices should continue to inch up,' she said.

'But the pace of growth is likely to moderate to a more sustainable rate of 3 per cent to 5 per cent each quarter, given the Government's stance that more measures could be introduced should home prices rise uncontrollably.'

This means that barring any external shocks, private home prices could rise by between 12 per cent and 15 per cent for the whole of this year, said Ms Tay.

In comparison, prices shot up by almost 16 per cent in the third quarter of last year alone, and by another estimated 7.3 per cent in the fourth quarter.

This year will also see a shift in focus from the mass market segment, which dominated buyers' interests in the recession last year, to high-end and luxury homes.

Industry watchers think these expensive properties are expected to outperform the general market, as optimism about the completion of the two integrated resorts, as well as the recovering global economy, draw well-heeled foreign buyers back to Singapore property.

Last week, DBS managing director and head of group research Timothy Wong said that high-end home prices are expected to shoot up by 10 per cent to 15 per cent this year.

The opening of the integrated resorts will draw high-rollers who may be deterred by Hong Kong's runaway luxury home prices, he said.

It also helps that expensive homes in the prime districts are in limited supply compared with mass market housing, and that the Government - which is keeping a watchful eye on speculation in the mass market - is likely to take a more 'laissez-faire' attitude towards the high-end property market, added Mr Wong.

Rents of private homes are also expected to pick up this year, in line with the expected rise in the number of expats as more firms start rehiring, said Ms Tay. She predicts that rents will rise by 5 per cent to 10 per cent over the year.

All in all, it looks like a steady year for the private housing market. And if there is a little less fizz and fever, so much the better for buyers and sellers alike.

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