Ghosts don’t scare buyers as August home prices rise

The private housing market showed signs of life in August with resale prices rising for the first time in five months, shrugging off the traditionally inauspicious Hungry Ghost month, but analysts have warned it is too early to say a sustained turnaround is on the cards.

Resale prices of non-landed private homes registered a month-on-month increase of 0.4 per cent last month, reversing the previous four months of downtrend, a flash report by Singapore Real Estate Exchange (SRX) showed yesterday. However, prices were still 5 per cent lower than the same period last year and 5.3 per cent below the recent peak achieved in January.

Last month’s rise was driven by gains in the Core Central Region and Rest of Central Region, where prices jumped 4.8 per cent and 1.5 per cent, respectively, SRX said. However, the Outside Central Region, which has been the most resilient to repeated rounds of property curbs thus far, suffered a 1.1 per cent decline in resale prices.

“Looking at the SRX numbers, the market has been see-sawing with some months of price declines and then another few months of increases. What this means is that it is not conclusive that the market is actually improving,” said Mr Alan Cheong, senior director of research and consultancy at real estate firm Savills Singapore.

“The market is showing downside bias, but it is moving at a slow pace and with some resistance — the general economy is not moving at a distressed pace, so there’s no urgency for many people to force sell,” he added.

Mr Eugene Lim, key executive officer at property agency ERA, agreed that it is still early days to call a turnaround in the resale private housing market. He noted that the latest rise in prices was not accompanied by a surge in transactions, which showed that buying momentum remained subdued.

The SRX figures showed 418 non-landed private homes were re-sold last month, little changed from the 417 units transacted in the previous month.

“The slight increase in prices did not come with an increase in demand, which shows that buyer sentiment remains low. With all the measures in place, the low sentiment is expected to remain for now — buyers are now more cautious, so they take time to source out value buys,” Mr Lim said.

Besides curbs such as the Total Debt Servicing Ratio and Additional Buyer’s Stamp Duty that continue to weigh on the market, a weakening rental landscape is also undermining the resale market, analysts said.

The SRX report showed that overall rents fell 0.6 per cent last month, the seventh straight month of decline, while rental volume rose by 3.6 per cent to 3,539 units.

“Notwithstanding the slowdown in arrivals of foreign nationals in Singapore, there is still demand for rental. But the increase in supply of completed units is faster than the increase in demand, so rents will continue to fall for that reason,” said Mr Cheong.

Source : Today – 9 Sep 2014

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