Resale private home market stirring

The resale private home market is set for a rebound after a drop in transaction volume in the first quarter following the introduction of more cooling measures in January, with sales potentially doubling in the second quarter from the previous three months, according to property analysts.

SLP International Property Consultants estimates between 3,600 and 4,300 units of both completed and uncompleted units in the resale market would change hands in the second quarter, up from about 2,200 units in the previous quarter.

Based on caveats lodged, about 3,500 resale units had been transacted from January to early last month. Some analysts said the total units of resale private homes sold this year should be comparable to the 15,136 transacted last year.

Even as new launches continue to draw buyers, the resale private property market has been catching up, analysts said. Enquiries and turnout at viewings of resale units have improved in recent weeks largely because buyers feel resale properties now offer better value and comparable rental yields.

Mr Mohamed Ismail, Chief Executive of real estate agency PropNex, said: “Sky Habitat at Bishan is S$1,600 per square foot. Bishan 8, opposite, goes for S$1,100 psf. In other words, when you buy a resale unit, you are going to pay lower psf (and the) absolute quantum is going to be lower, which means you pay less ABSD (additional buyer’s stamp duty).”

PropNex said it had seen resale transaction volumes for private homes jump 20 per cent in the last two months. The pick-up in resale volume has been accompanied by a rise in prices, according to Singapore Residential Price Index (SRPI) preliminary estimates released on Tuesday.

The SRPI, which tracks resale prices of completed non-landed private homes, rose 1.9 per cent in April from March, extending the 1.1 per cent rise in the previous month. Prices rose across the board, with those of homes in the non-central region leading gains with a 2.4 per cent jump. Prices of homes in the central region rose 1.3 per cent, while those of small units — with areas below 506 sq ft — increased 1.8 per cent, the data showed.

The Government has introduced seven sets of measures since 2009 to cool the housing market, the latest round being in January that included higher ABSD, lower loan-to-value-ratios and larger down payments.

The NUS Institute of Real Estate Studies, which publishes the monthly SRPI, said the January curbs “apparently had only a temporary effect on the trajectory of housing prices”.

But as the resale market makes a comeback, analysts warn of potential risks. Mr Nicholas Mak, Executive Director of SLP International Property Consultants, said: “If prices continue to increase and rental yields continue to be compressed, one of the risks is that if interest rates were to increase this year or next year, this would actually discourage investors. (This is) because if the rental yield is compressed to such a low level, any increase in interest rates would make that investment property less attractive.”

The average rental yield for private homes in Singapore now hovers between 1.8 per cent and 2.2 per cent, he noted.

Source : Today – 1 June 2013

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