Demand for private homes in the city expected to rebound

The buying interest for private homes in the city is expected to make a comeback as prices continue to moderate.

Some property analysts believe demand for these high-end homes could pick up as early as the middle of next year.

But others have said the cooling measures may still weigh on buying sentiment going forward.

The brisk sales at DUO Residences at Bugis recently showed that there is still strong interest for private residential properties in the city, if the price is right.

For example, its average selling price of S$2,000 per square foot was 20 per cent lower than units in the vicinity.

Analysts said foreigners account for about one-third of the demand for high-end homes and the cooling measures have kept them on the sidelines. However, analysts note that some foreign investors are coming back to the market.

As at the third quarter of 2013, 10,538 units of completed and uncompleted private homes in the Core Central Region (CCR) are unsold.

That is about one-third of the unsold inventory islandwide.

Unsold stock in the city fringe stands at 9,039 units and 12,655 units in the suburban areas, according to property consultancy Knight Frank.

Knight Frank said the number of unsold units has started to decline since the second quarter of last year.

Alice Tan, associate director and head of consultancy and research at Knight Frank, said: “The unsold inventory in the Core Central Region has actually started to see a gradual decline since the second quarter 2012. The gradual decline is about 4 per cent per quarter. This actually reflects that the demand for CCR private homes is gradually returning.

“From the middle of next year, demand for high-end homes could return as prices start to moderate to a level that more potential buyers start to see its value. So there could be an uptick in overall home prices from the second half of next year onwards.”

Knight Frank said that according to its research, in the last few quarters, prices of new high-end homes in districts 1, 2 and 9 were about five to eight per cent lower compared to the period before the seventh round of cooling measures, which was implemented in January this year.

Another property firm, Century 21, said homes in the CCR are relatively under-valued.

Prices there have only climbed 7 per cent since the peak in 2008, compared to 17 per cent for homes in the city fringe, and 47 per cent for suburban homes.

Ku Swee Yong, CEO of Century 21, said: “Where we find most value for money now would be in CCR properties, especially in freehold properties, because the proportion of freehold properties in Singapore has been reducing quite quickly with more Government Land Sales sites that are coming out with 99-year leases.

“In terms of rebound, we would need to see renewed foreign buying into CCR and foreign buying could probably go up only if there are adjustments to the 15 per cent ABSD (Additional Buyer’s Stamp Duty) for foreigners and 10 per cent for PRs (Permanent Residents) holding more than one unit.”

According to the Urban Redevelopment Authority, CCR home prices have fallen in the second and third quarter.

Prices of non-landed properties in the CCR increased by 0.6 per cent in the first quarter of 2013, but fell 0.2 per cent in the second quarter and 0.3 per cent in the third quarter.

And analysts expect a further moderation of 0.5 to 1 per cent this quarter.

As prices weaken, demand for city homes could return, possibly in the second half of next year.

Knight Frank said this could spark a gradual increase in home prices in the CCR.

Source : Channel NewsAsia – 12 Dec 2013

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