A short-term blip or ...

Property transaction volumes rebound in Feb, but analysts warn surge may not last

AFTER almost half a year of dismal sales, the private property market staged a rebound last month with 1,323 new units sold — about10 times :the 108 units sold in January.

But while the surge had the mass market segment to thank, the current enthusiasm may not be sustainable, say analysts.

Some 60 per cent of February’s sales — a month that saw the highest volume of transactions since August 2007 — came from high-profile, mid-tier projects such as Caspian and Alexis, according to Government statistics released yesterday. Third on the list was The Quartz, which sold 168 units (see box above).

Located near MRT stations and generally priced below $1,000 per square foot, the three projects appealed to HDB upgraders who had been holding back during the property bull run between 2006 and 2007, said CBRE Research executive director Li Hiaw Ho.

Overall, 70 per cent of all units sold last month were below $1,000 psf, noted PropNex chief executive Mohamed Ismail — a sign that most of the sales were to HDB upgraders.

Discounted prices also lured in buyers. Units at The Quartz, for instance, were relaunchedlast month at around $417 to $684 psf, lower than December’s transacted range for the project of $766 to $814 psf.

While February’s strong sales are a shot in the arm for the beleaguered market, analysts do not think they point to a broad recovery.

“As the real estate market is expected to continue to soften this year, such a burst of buying activity may occur from time to time,” said Mr Nicholas Mak, Knight Frank’s consultancy and research director. “They may not be sustainable in the medium term unless there is an overall improvement in the economy.”

Jones Lang LaSalle’s South-east Asia’s head of research Chua Yang Liang concurred, saying the strong showing last month was probably a “short term blip” in the larger scheme of things. He said: “The pricing of projects within the affordable total quantum range has coincided with preceding periods of stable and strong public housing prices ... supporting the renewed buying interest.”

With the economy expected to slow further, “hardcore incentives” such as pricing discounts and rental guarantees may be required to maintain the same number of sales, he added.

This month, newly-launched mid-end projects are expected to keep private home sales at an encouraging level — as shown by recent sales of Double Bay Residences at Simei and Suites@Kembangan.

PropNex’s Mr Mohamed Ismail predicts March sales to be about 800 units, which would be lower than February but still a big improvement from the preceding months.

Overall, CBRE’s Mr Li sees the year as presenting “a window of opportunity where the gap between private home prices and HDB resale prices is narrow”.

Source: Today, 17 Mar 2009