A NEW report from property consultancy firm CB Richard Ellis (CBRE) shows that prices of private, non-landed homes have risen sharply since July.
An analysis of caveats lodged by home buyers in the third quarter up to Tuesday indicates that the median price of such new homes with a 99-year lease jumped 16.5 per cent to $769 per sq ft (psf), from $660 psf in the second quarter.
For freehold homes or those with a 999-year lease, median prices hiked an even more dramatic 30.8 per cent to $1,241 psf in the third quarter, compared with $949 psf in the second.
CBRE's analysis shows that buyers were willing to commit to homes with larger price tags during the quarter in question. They paid a median, or mid-range, price of $916,000 for new 99-year leasehold homes during the third quarter - up 11 per cent from $824,967 in the second.
And the increase in total price paid for property is more marked in the freehold homes category, which was left reeling by the global financial crisis. Buyers paid a median price of nearly $1.4 million in the third quarter - up 32.2 per cent from $1.06 million in the second. This latest median price is almost double the first quarter's $734,500.
Resale prices also rose, but at a slower pace. In the sub-sale market, 99-year leasehold homes sold for a median $1,032 psf in the third quarter. This represents a near 19 per cent rise from $869 psf in the second.
CBRE executive director (residential) Joseph Tan said that barring any unforeseen circumstances, the rises pointed to prices having bottomed out and being on the road to recovery.
An estimated 12,450 units were sold between January and September, nearly three times the 4,264 new homes sold for the whole of last year, said CBRE.
Experts predict that prices may go higher given that buoyant demand persists, but they expect the rises to be slight following the Government's introduction of market-calming measures.
These include the removal of the interest absorption scheme that allows buyers to defer the bulk of the purchase price until a project is completed. Because of the premium charged, buyers are now not so keen on the scheme.
By themselves, the measures are not viewed as dramatic, experts said. But, because the market is sentiment-driven, the message the Government is sending out should put a halt to large rises, according to Jones Lang LaSalle's head of research (South-east Asia) Chua Yang Liang.
'Further price increases will be checked because they have climbed substantially over the last six months, so some resistance can be expected,' Mr Tan said.
Dr Chua believes new launch prices should stabilise towards the end of the year, while resale prices - which traditionally lag behind new launch prices - may rise slightly.
The firm's preliminary data shows resale values in prime districts have risen 10 to 15 per cent from the lows earlier in the year. But they are still 24 per cent behind the 2007 peak.
Non-prime home prices are up some 20 per cent on the lows seen early this year, but are 5 per cent short of their 2007 high.
Experts believe developers with launch- ready projects will push out their projects swiftly to make the most of the upbeat sentiment. These include the 1,040-unit The Interlace in Alexandra Road, the 119-unit Elliot At The East Coast and a 99-year leasehold condo in Yishun Avenue 1.
Experts think there are still plenty of keen buyers out there, but demand for new launches is going to depend greatly on price.
The drivers of demand are still largely in place, points out Ngee Ann Polytechnic real estate lecturer Nicholas Mak. 'There is the low interest rate environment, a healthy stock market, strong HDB resale prices and people are also thinking the worst is over,' he added.
Resilience in the HDB resale market has boosted the buying interest of HDB upgraders, who made up 51 per cent of new home buyers in the past eight months of the year. This compares with 44 per cent for the whole of last year, according to CBRE data.
Source, Straits Times, 17 Sep 2009
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