Private home prices fall 6.1% in Q4

BUYERS of new private homes don’t have to worry about not being able to move in on time even as some developers take advantage of incentives announced in Thursday’s Budget that allow them to extend the completion period of their projects.

To help developers improve their cash flow and give them more flexibility to plan their projects, the Ministry of National Development will allow developers of uncompleted Government residential sale sites to apply for a one-year extension of the completion period without having to pay an extension premium. But this only applies if none of the residential units in the project has been sold.

For projects in which homes have been sold, the extension will only be allowed up to the date of delivery of the sold units as stipulated in the sales agreement signed between the developer and the purchasers.

The Budget measure was announced just a day before the Urban Redevelopment Authority (URA) reported private home prices falling by the most a decade as they slipped 6.1 per cent in the fourth quarter last year.

This was much worse than the 5.7 per cent decline in the URA’s flash estimates and down from a 2.4 per cent decline in the third quarter. For the whole of last year, prices fell 4.7 per cent, compared to the 31.2-per-cent rise in 2007.

Rents for private homes also retreated along with home prices, declining 5.3 per cent in the fourth quarter, extending the 0.9-per-cent fall in the previous three months.

The URA data also showed there were 64,982 uncompleted units of private homes at the end of December, of which 31,004 units are expected to be completed between 2009 and 2011. Of the total, 43,414 or a hefty 66.8 per cent remained unsold, suggesting prices are likely to fall much further in the coming months.

Amid the gloomy prospects for the property market, analysts told Today developers - especially the larger ones - are likely to apply for the extension so that they can price their projects better at a later time.

City Developments (CDL), one of Singapore’s largest developers, welcomed the move. “The extended timeline gives us more flexibility in the way we market the property. We will certainly explore how best to utilize these measures in relation to the market conditions where necessary,” said a CDL spokesperson.

While prospects are bleak in the year ahead, Mr Li Hiaw Ho, executive director of property consultancy CBRE says the continued moderation of prices will kick-start the market, especially in the mid-tier and mass-market projects.

Saying that home prices are likely to see a further correction of 10 to 15 per cent this year, Mr Li added: “We believe sales momentum will pick up gradually from the second quarter onwards so that the total number of new homes transacted this year should be higher than the 4,264 units chalked up last year, at around 5,000 to 6,000 units.”

Source: Today - 24 Jan 2009