Resale condo prices in CCR up 6.2% y-o-y: SRX

DESPITE a 0.5 per cent month-on-month decline in resale prices of condos and apartments in the Core Central Region (CCR) in July 2016, prices in the region were up 6.2 per cent year on year.

This is according to SRX Property flash estimates for last month released on Wednesday.

The CCR has outperformed the other two regions tracked by SRX’s resale price index for non-landed private homes, on a y-o-y basis.

The sub-index for the city fringe or Rest of Central Region (RCR) for July 2016 inched up 0.5 per cent from July 2015, while the sub-index covering the suburbs or Outside Central Region (OCR) shrank 2.8 per cent over the same period.

SRX Property’s overall resale price index for non-landed private homes inched up 0.1 per cent y-o-y compared with July 2015.

Savills Singapore research head Alan Cheong also noted that based on SRX’s latest data, the number of non-landed private homes in CCR that were resold has risen 24.6 percent year on year from 118 units in July 2015 to 147 in July 2016.

“The rise in CCR resale prices and volumes has been and should in the near term continue to be catalysed by non-traditional payment schemes for units in developers’ inventory of completed projects,” he said.

“These alternative payment schemes have created a bridge for dithering well-heeled buyers who had been waiting on the sidelines to cross over to commit. If these schemes continue, the activity in this segment of the market should also continue.”

Mr Cheong also highlighted that the 6.2 per cent y-o-y rise in the CCR resale price index for non-landed private homes is due partly to the premium for units in newly completed, de-licensed projects sold by developers (transactions of such properties are classified as “resales”). Moreover, he noted that caveated prices for such transactions in the CCR in recent months may not fully reflect net prices after factoring in some of the novel schemes minted by developers that have proven to be popular.

On a month-on-month basis, SRX Property’s overall resale price index for non-landed private homes in Singapore eased 0.4 per cent in July 2016 over the previous month, based on the latest flash estimate reading.

This contrasts with a revised gain of 0.4 per cent month on month in the index for June 2016. SRX Property had earlier indicated a 0.5 per cent increase for June based on its flash estimate for that month.

The sub-indices for all three regions were down month on month in July 2016. Prices contracted 0.5 per cent in CCR, 0.6 per cent in RCR and 0.3 per cent in the OCR. The overall index for July was down 6.6 per cent from the recent peak in January 2014.

SRX Property estimated that on an islandwide basis, 770 non-landed private homes were resold last month – up 10 per cent from the 700 units resold in June 2016. Last month’s estimated resale volume also translated to a year-on-year expansion of 31.4 per cent from the 586 units resold in July last year. However, last month’s resale volume was down 62.4 per cent from the peak of 2,050 units in April 2010.

SRX Property’s data also showed that the overall median Transaction over X-Value (TOX) worsened to negative S$10,000 in July 2016 from negative S$7,000 in June 2016. The median TOX measures how much people are overpaying or underpaying against the computer-generated estimated market value or the so-called X value.

Mr Cheong expects resale transaction volumes of condos and apartments islandwide this year should exceed last year’s. Prices in all three regions could see-saw on a month-on-month basis but year on year, the prices should be flattish or post a mild increase.

CCR will continue to be the star performer for the rest of this year in terms of a revival in both resale volumes and prices. “As at end-December 2016, we expect resale prices of CCR condos and apartments to have risen 3 per cent over December 2015.”

OrangeTee’s head of research and consultancy Wong Xian Yang is not predicting a robust price recovery for resale condo and apartment prices generally – given that the property cooling measures are expected to remain unchanged, and the housing glut will continue to weigh down on rents.

“Prices may stabilise around current levels, as sentiments have generally improved and interest rates remain relatively low,” he said.

The outlook on the direction of interest rates remains cloudy, as encouraging signs from the US economy are balanced against the implications of Brexit.

“A potential quick rise in interest rates may derail the current stabilisation in prices. The three-month Sibor (Singapore interbank offered rate) has dropped to below one per cent. But should interest rates start rising in a similar manner as they did during the start of 2015, some may start letting go of their investment properties as holding costs outpace rental income,” said Mr Wong.

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