Price gap of new and resale private home narrows in first quarter

The price gap between uncompleted and completed private homes narrowed in the first quarter of this year.

Data from property consultancy SLP International’s first quarter residential market report shows that high-end and mid-tier properties have been the most affected.

Uncompleted homes usually command higher prices. A narrowing of this gap, caused by a drop in uncompleted home prices could reflect market shock at January’s cooling measures, said SLP’s head of research, Mr Nicholas Mak.

Difference in median prices of uncompleted and completed high-end homes dropped from $166 per sq ft (psf) to $92 psf in the first quarter.

Similarly, the gap for mid-tier properties dipped from $558 psf to $455 psf in the first quarter.

Typically, the two sets of prices move in tandem, said Mr Mak.

‘Sometimes the prices move in different directions. This could be due to price growth, strong demand. I think it can also be taken as a sign that the market has gone into a bit of shock in the first quarter after the introduction of more cooling measures,’ he said.

According to SLP, the fall in price of uncompleted homes was partly due to discounts given to developers.

Mr Mak said the popularity of shoebox homes – units under 500 sq ft – could be lifting price gains of uncompleted homes.

Mass market homes also proved popular. The report said median prices of uncompleted properties in the mass market segment rose 6 per cent in the first quarter of this year to $988 psf.

This is due to a healthy demand for suburban condominiums, said Mr Mak. The figures show that mass market units accounted for more than half of all apartments sold by developers in the first three months of this year.

Mr Mak said more buying opportunities might emerge, especially with owners of suburban resale properties more willing to cut prices amid concerns that cooling measures may soften demand.

‘The lack of availability of completed projects is stopping buyers from buying more of such properties over uncompleted homes, which are usually released in bulk during property launches,’ he said.

An oversupply of completed properties is expected to hit the market next year, which could slow down price growth in the completed homes market, he said.

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