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Greater urgency in picking up units in recent launches

Greater urgency in picking up units in recent launches

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A SLOWER pace of decline in private residential prices in the first quarter continues to affirm the view that a bottoming out is under way - a view reinforced by volumes hitting the highest in 15 quarters and prices of non-landed properties staying flat during the quarter.

Though the private housing market extended its longest losing streak since Q1 2004, the 0.4 per cent drop in private home prices was the smallest dip in the past 14 quarters.

In the executive condominium (EC) market, 1,072 units were sold by developers in the first quarter, up from 734 units in the preceding quarter. Upcoming executive condo launches include Hundred Palms Residences EC, Yio Chu Kang EC, Inz Residence EC, Anchorvale Lane EC,  while existing ones include Parc Life EC , Signature at Yishun, The Terrace EC, Brownstone EC, The Vales EC, Sol Acres EC, The Visionaire EC, Bellewoods EC, The Criterion EC and Northwave EC. Hundred Palms Residences details and Hundred Palms EC show flat will be available shortly.

From the peak of Q3 2013, private home prices have fallen by 11.6 per cent.

Non-landed home prices remained unchanged in the first quarter, after a 0.8 per cent fall in the preceding quarter, data from the Urban Redevelopment Authority (URA) on Friday showed.

The number of private homes transacted in the first quarter stood at 5,202 units; this was the highest level in 15 quarters, a 83 per cent jump from a year ago and 19 per cent more than the quarter before.

Though prices have not yet reached a trough, these are reasons enough for JLL national director of research and consultancy Ong Teck Hui to conclude that the private residential market is "on its firmest footing since mid-2013".

OrangeTee head of research and consultancy Wong Xian Yang said the market could bottom out earlier than expected towards the end of this year. He cited the following as factors: stronger-than-expected developers' sales, rising land costs, dwindling levels of unsold inventories, consistently rising resale volumes and surprisingly resilient occupancy rates.

"However, market recovery is expected to be U-shaped, due to the current cooling measures and global economic uncertainty," he added.

PropNex Realty chief executive Ismail Gafoor noted that buyers and investors who have been waiting on the sidelines have shown greater urgency in picking up units in recent launches, in anticipation of prices going up in the coming quarters following the slight adjustments to cooling measures in March.

Developers sold 2,962 units in the first quarter, up from 2,316 units a quarter ago.

Resale volumes grew to 2,170 from 1,944 units.

But market watchers are not discounting the patches of market weakness yet.

The existing cooling measures, which many perceive to have a lower chance of being unwound for now, are still weighing on the market.

And then there are also rising interest rates and uncertainty in the jobs market to contend with, said SLP International executive director Nicholas Mak.

"For the rest of this year, the private housing price indices are expected to continue to decline at a slow pace," he said.

With fewer new condominium projects expected to be launched in the second half of this year, the catalysts for property prices would not be as strong for the rest of this year, he added.

Strong buying demand for popular launches in the city-fringe and suburban regions during the quarter - including that for Park Place Residences in the Rest of Central Region (RCR) and The Clement Canopy and Grandeur Park Residences in the Outside Central Region (OCR) - could have propped up prices in those regions, analysts suggested.

URA price indices for non-landed RCR and OCR marked a 0.3 per cent and 0.1 per cent rise in the first quarter respectively. RCR and OCR had declined 2 per cent and 0.6 per cent in the fourth quarter.

But prices in the prime area or Core Central Region (CCR) were down 0.4 per cent, after having risen 0.1 per cent in the previous quarter.

New sales made up 59 per cent and 66 per cent of total sales in the RCR and OCR respectively. Resales in the CCR accounted for 82 per cent of the region's total transactions.

Meanwhile, the landed segment continues to lag the broader market recovery. Its steep 1.8 per cent price fall lent weight to earlier views that the 0.8 per cent rise the quarter before was a technical rebound.

Mr Mak said: "The fundamentals in the landed housing market have not changed. The buying demand for landed housing is curtailed by the property market curbs and the restrictions on foreigners to purchase this type of real estate."

While vacancy rates for private homes eased slightly by 0.3 percentage points to 8.1 per cent in the first quarter, the rental market malaise is likely to persist. The OCR, where a majority of completions this year are located, is expected by analysts to be the hardest hit.

In the first quarter, overall rents of private homes slipped 0.9 per cent in a 14th straight quarter of decline, after a one per cent drop in the previous quarter.

Mr Mak called the quarterly 0.4 per cent rise in rents in the OCR in the first quarter a statistical blip, noting that it does not signal the start of a rental recovery in that region.

Based on OrangeTee's estimates, the overall gross rental yields of properties in the OCR fell to 3.3 per cent last year, from 3.9 per cent in 2012. Last year's gross rental yields in the Core Central Region (CCR) and Rest of Central Region (RCR) were at 2.9 per cent and 3.2 per cent respectively.

In the public housing market, HDB resale prices slipped 0.5 per cent in the first quarter as transactions fell 9.6 per cent quarter on quarter to 4,530 in a seasonally slow period.

The number of applications approved for subletting of HDB flats fell by 6.5 per cent from a quarter ago to 9,981 cases.

Edmund Tie & Company head of South-east Asia research Lee Nai Jia said the dip in HDB resale prices could be a blip as the increase in government grants should boost demand for public housing.

"Notwithstanding, it is still premature to conclude that an upturn is around the corner for prices of HDB flats, especially after National Development Minister Lawrence Wong's caution over the purchase of homes with an expiring lease," he said.

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