Straits Times: Sat, Sep 03
Freehold bargains still around
SKY-HIGH home prices might be the talk of the town but there are still bargains to be had - if prices are anything to go by - even in this fevered market.
At least 47 freehold homes have sold for $600 per sq ft (psf) or less - and under $1 million - so far this year, according to caveats lodged with the Urban Redevelopment Authority. That is sweet music for home hunters faced with prices that have been edging above $1,200 psf even in new suburban projects.
Buyers have been finding lower-priced freehold homes around the Geylang, Hougang and Pasir Ris areas, though a cheap property can mean it is in a dodgy neighbourhood or has no end of problems.
The cheapest home sold this year by unit price was a 2,433 sq ft apartment in Lorong 20 Geylang that went for just $251 psf - or $610,000 - in June.
Ballota Park condo in Pasir Ris also had three apartments changing hands for under $1 million and at $600 psf or under, while Wing Fong Mansion in Lorong 14 Geylang had six.
Surprisingly, there were also two units in prime District 11 that fell into the bargain-bin category. A 1,098 sq ft flat at Shelford Regency in Bukit Timah was snapped up at $546 psf - or $600,000 - while an 861 sq ft home at Novena Court was bought for $581 psf, or $500,000.
The 47 transactions comprise only a tiny fraction of the 9,437 secondary transactions of non-landed homes - excluding executive condos - in the market this year. Experts say many of the units could be in older developments, in less convenient locations, in original condition or include private enclosed spaces that reduce the size of the unit's livable space.
Chesterton Suntec International research head Colin Tan noted that many of the Geylang apartments are in seedy red-light districts. Some of the units could also be rented to foreign workers.
'There could also be a financing issue where loans for such units are seen as higher risk, so potential buyers might have to fork out cash instead, further reducing the pool of buyers,' he added.
Cushman & Wakefield's Asia-Pacific research senior manager Ong Kah Seng said such deals, especially for homes at $500,000 and below, have been falling. The number sold below $1 million has also fallen from 74 per cent of all non-landed transactions in 2005 to 45 per cent last year, Cushman's analysis showed.
'The decline in their share is significant, largely due to a run-up in private residential prices over the years,' he said. '(It) also meant there are much fewer lower-cost choices available for buyers who may have to compromise on the accessibility, locality, the size or age, and tenure of their home to meet their budget.'
But bargain-hunters might still bite. Smartloans.sg chief executive Vinod Nair estimates that an 80 per cent loan of $800,000 on a $1 million home on current interest rates means a monthly mortgage of just $2,700 on a 30-year loan.
But Mr Ong said buyers should also note that some properties have limited resale value in terms of locality, or require higher maintenance costs due to age.
Kim Eng analyst Ooi Ti Tung said that completed freehold units below $600 psf are attractive as the replacement cost of such units is at least $650 psf, comprising land and construction costs.