Published March 22, 2007

Mass market condo resale prices up 9.5% in Q1

Jones Lang LaSalle sees further rise of 2-3% for next quarter


RESALE values for non-landed private homes in the mass market have risen about 9.5 per cent this quarter over the preceding three months to average $460 per square foot, according to Jones Lang LaSalle (JLL).

The property firm expects a further quarter-on-quarter rise of about 2-3 per cent for the next quarter.

The 9.5 per cent gain for the first three months of the year is the highest quarterly increase since 2000, leading JLL to declare that it beats the peak of Q1 2000 by 0.2 per cent. JLL's database goes back to only Q1 2000.

But while previous recoveries in the mass-market were driven bottom up, that is by HDB upgraders, the current pick-up seems to be filtering down from the prime market, according to JLL head of research Chua Yang Liang.

Giving a more detailed analysis of the buyer profile for mass-market private apartments and condos, JLL said the ratio of buyers with HDB addresses to buyers who are already living in private homes has declined from a peak of 6.1 in Q2 2002, when there was a widely anticipated announcement on caps on the use of CPF funds for housing, to 0.8 in Q4 2006. JLL estimates that the figure could decline further this quarter.

Dr Chua attributes the decline in the ratio largely to private home owners relocating to mass-market locations from their prime district homes that have been sold through collective sales. In comparison, during the mid-1990s property boom, the highest ratio of HDB-to-private upgraders was the 3.3 recorded in Q4 1998.

JLL defines mass-market locations as areas outside the traditional prime districts 9, 10 and 11, the emerging central districts of 1 to 4 (covering the CBD and Sentosa Cove) and districts 15 and 16 (east coast).

Another factor that has been boosting the proportion of existing private home dwellers who have been buying mass-market condos/apartments is the growing pool of permanent residents, JLL reckons.

The firm also said that a total of 102 subsale deals were lodged for non-landed private homes in the mass market in Q4 2006, up 168 per cent from the preceding three months and passing the previous peak in Q4 2005 by some 29.1 per cent.

'As a percentage of total transactions, however, this level remains at a relatively healthy range of 4.3 per cent, compared with 39 per cent in Q2 1995 when the level of speculation was the highest,' JLL said. Projects that had subsale transactions included The Centris, City Square Residences, The Lakeshore, Southbank and Varsity Park.

The firm also noted that mass-market projects launched by developers such as The Centris, Yew Tee Residences and ClementiWoods have attracted a strong following of local buyers.

The level of speculative buying in the mass market this quarter is likely to match or marginally exceed the 4.5 per cent level, it said.