As buyers thronged showflats amid improved sentiment in recent months, the resale market also saw an uptick in the second quarter, according to a report by Jones Lang LaSalle (JLL).
Using recent housing data, the consultancy estimated that resale volumes increased more than 70 per cent from the first quarter to reach 1,464 transactions.
The two main reasons were pent-up demand from Housing Development Board (HDB) upgraders – whose own flats were seeing slower price declines than private homes – and the affordable pricing despite marginal increases, said JLL.
HDB upgraders made up almost half the buyers in the second quarter’s resale market, some 11 percentage points above the 35 per cent recorded in the same period a year earlier.
Further attracting HDB upgraders was the fact that resale prices for private homes remain “highly affordable”, JLL said. While current average resale prices in the mass market have surged 9.4 per cent from the previous quarter to $580 per square foot (psf) – the highest rebound across other submarkets – they remain 17 per cent below the peak of the first quarter of last year, the firm estimated.
In the luxury segment, it found that buyers were more willing to commit, seeing that average prices of $1,800 psf represented a 34-per-cent discount from peak. This is despite current prices being 53 per cent above the last trough in the first quarter of 2005, JLL noted.
South East Asia head of research Dr Chua Yang Liang believes the uptick is not sustainable, as the buoyancy is coming from short-term factors such as pent-up demand, discounted pricing and attractive mortgage packages.
The sustainability of any market recovery, he said, depends on longer-term factors such as growth in demand and economic production.
“I do not reckon the current activity in the market is likely to remain if prices continue to rise unsupported by growth of gross domestic product,” Dr Chua said.
Source: Today, 25 June 2009