Friday, April 16, 2010

Home sales sizzle despite cooling drizzle

Many buyers have HDB addresses; will more steps follow?

Government measures to cool the property market have not doused the enthusiasm of buyers. Developers sold 1,761 private homes in March – 47 per cent more than the 1,202 in February.

This was disclosed in fresh figures from the Urban Redevelopment Authority (URA) yesterday. For the first quarter, sales hit 4,446 units – more than double the figure in Q4 2009 and up 67 per cent from Q1 2009.

Still, transaction volumes tell just half the story. Industry observers are keeping watch on how property prices are moving, as that will determine if the government implements more cooling measures ahead.

‘If the sales volume continues to reach this kind of level, accompanied by strong increases in prices, especially if that happens in the mass market, I think there is a high likelihood that more measures will be introduced,’ said Colliers International research and advisory director Tay Huey Ying.

March’s sales figure of 1,761 units is a seven month-high, coming after the 1,805 units in August last year. The core central region (CCR) and the outside central region (OCR) saw the most activity, accounting for 41 per cent and 44 per cent of all transactions respectively.

There were at least six new launches in the CCR, such as 76 Shenton, Nathan Suites and Seascape. 76 Shenton chalked up the highest number of units sold, as buyers snapped up all 202 units at prices of $1,583-$2,559 per sq ft.

The highest transaction prices were seen at existing projects. A unit at Nassim Park Residences went for $3,465 psf, while one at The Orchard Residences went for $3,155 psf.

In the OCR, at least three new projects were launched: Parc Elegance, Primo Residences and The Vision. At The Vision, 236 units were sold at a median price of $1,050 psf.

Property consultants cited several reasons for the strong showing in March. For instance, the economy did better than expected and more new homes were made available. Developers pushed out 1,790 new units, 54 per cent more than in February.

Knight Frank chairman Tan Tiong Cheng added that February would be quieter because of Chinese New Year. Inevitably, sales in March would seem much stronger in comparison.

Many consultants reckoned that anti-speculation measures introduced in February for the private home market would not have much impact. As DTZ South-east Asia research head Chua Chor Hoon said, they were aimed only at a small group of buyers who might have overstretched themselves.

Colliers’ Ms Tay even suggests that a separate set of cooling measures for the HDB market in March could have spurred private home sales. Her analysis of caveats for new sales showed that HDB flat owners made up 44 per cent of buyers in March, up from 33 per cent in February.

HDB upgraders may be rushing ‘to lock in their private property purchases for fear of being caught in a double-whammy situation where private property prices rise beyond their means, and HDB resale flat prices fall after the government stepped in to curb speculative activity’, she said.

The question now is whether strong private home sales in March will lead to more state intervention. Prime Minister Lee Hsien Loong said on Wednesday that the government will keep watch over the next few months to see if more action is needed. ‘If we need to, we will. We have some instruments,’ he said.

Most consultants BT spoke to do not think March sales will cause serious worry.

‘The government is not as concerned about volume as about prices,’ said Knight Frank’s Mr Tan. ‘And even more important is that the price increase has slowed down.’

Mr Tan was referring to flash estimates from URA two weeks ago, which showed that private home prices could have gone up by 5.1 per cent in Q1 from the previous quarter. This is lower than the 7.4 per cent quarter-on-quarter rise in Q4 2009. URA will release updated figures next Friday.

Barring any shocks to the property market, consultants expect robust sales to continue. Estimates for the total number of homes sold for the year range from 10,000 to 15,000.

‘Sentiment is even higher now with the GDP growth forecast revised upwards,’ said DTZ’s Ms Chua. ‘Some sceptics who had been holding back would be drawn into the market.’

CBRE Research executive director Li Hiaw Ho pointed out that the strong sales momentum in Q1 2010 has spilled over to April. Buyers have already bought more than 300 units at the launch of Waterbank at Dakota this month.

Source: Business Times, 16 Apr 2010

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