The private housing market has entered the year on a firm footing, with developers’ home sales in January rising to 1,476 units – three times as high as the previous month. They also hit their highest level since August last year.
Of the units launched in January as well as units sold in the same month, about half were in the Core Central Region, reflecting a revival in activity in the choicest housing locations in Singapore. Another interesting statistic gleaned from the latest monthly data released by the Urban Redevelopment Authority (URA) yesterday is that 76 per cent of the total units sold in January were priced at at least $1,000 per square foot (psf). Such a high proportion has not been seen since URA began releasing such data in June 2007, observes property agency PropNex CEO Mohamed Ismail.
Industry players expect this trend to continue for the rest of 2010, pointing to high land prices achieved at state tenders late last year, which would translate into higher target selling prices by developers.
As a developer put it: ‘Increasingly, people will accept that $1,000 psf is not a shocking price for mass-market private homes anymore.’ He acknowledged, however, that further price increases in this segment will be checked by what HDB upgraders can afford.
Also, many expect sales volumes and price gains this year to shift to the mid and higher price segments, hence supporting a bigger proportion of higher-priced transactions.
It was not price reduction but more launch activity that helped raise developers’ January sales volume, notes real estate lecturer Nicholas Mak. ‘Average prices in many recently launched projects either increased marginally or remained unchanged,’ he added.
A brighter economic outlook and pent-up demand after low sales in Q4 last year also gave January numbers a push, felt CB Richard Ellis (CBRE) executive director Li Hiaw Ho. ‘The 1,476 units sold in Jan 2010 alone is about 80 per cent of the 1,860 new homes sold in the entire fourth quarter of 2009,’ he said.
House-hunters also moved after noting that the government’s property-cooling measures last September did not translate into price reductions, noted Knight Frank chairman Tan Tiong Cheng.
CBRE’s Mr Li said the stronger sales volume in January was also partly driven by anticipation of a possible price hike in the mid and high-end segments this year.
The 1,476 private homes (excluding executive condos) developers sold last month was triple the 481 units sold in December last year. The latest January number is nearly 14 times the 108 units sold in January last year.
Developers launched 1,424 private homes last month, almost double the December figure of 734 units, according to URA.
Industry observers also say private home-buying activity is being driven mostly by investment demand rather than owner occupation. ‘We’re getting a lot of interest from mainland Chinese buyers because luxury home prices in Singapore have not recovered to the extent seen in gateway Chinese cities and Hong Kong,’ says DTZ executive director Ong Choon Fah.
CBRE predicts URA’s overall private home price index could appreciate 8 to 10 per cent in 2010 after last year’s 1.8 per cent rise.
Developers are expected to rev up launches in the coming weeks. ‘Some developers who were supposed to have released projects before Chinese New Year held back their launches, for greater clarity on the price of land when the first few state land tenders this year close,’ said a senior executive with a major developer. Assuming land costs remain firm, that will give developers greater confidence in pricing their end units, he added.
Low interest rates and improving sentiment will support buying interest from Singapore residents as well as foreigners this year, he argues.January’s top-selling projects in the primary market were Cube 8 at Thomson Road (167 units), The Shore Residences in the Katong area (144 units), RV Edge along River Valley Road (91 units), Urban Suites in the Cairnhill area (88 units) and Parvis at Holland Hill (73 units).
The lowest psf price for a developer sale last month was for a unit sold at $544 psf at Oasis @ Elias; the highest price, $3,243 psf, was for an Orchard View unit.
Source: Business Times, 18 Feb 2010
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