Sales of new private homes hit 3-year high

The Straits Times
www.straitstimes.com
Published on Oct 16, 2012
Sales of new private homes hit 3-year high
Last month's figure up 84%; analysts expect lower volume after loan curbs

By amanda tan

NEW private home sales jumped by about 84 per cent last month compared with August, to 2,621 units sold, the highest monthly figure since July 2009.

The latest spike in sales came as the National Development Ministry revealed that 26,800 HDB flats, 22,400 non-landed private homes and 1,100 landed homes are set to be completed in 2014.

This is a sharp rise in supply compared with the 11,300 HDB flats, 12,500 non-landed private homes and 700 landed homes due for completion this year.

The figures were part of a parliamentary written response to Pasir Ris-Punggol GRC MP Gan Thiam Poh yesterday.

The latest sales figures for last month, released by the Urban Redevelopment Authority yesterday, pre-date new cooling measures unveiled earlier this month, which included loan term curbs.

One reason for last month's surge was that August's figure of only 1,427 units - a 27 per cent drop from July's number - was partly due to the inauspicious Hungry Ghost Festival.

But the sharp rise is less dramatic when executive condominiums (ECs) are factored in. When EC sales are included, last month's figure of 2,771 units sold falls short of the 3,138 homes moved in February.

ERA Realty key executive officer Eugene Lim noted that last month's 2,621 non-EC sales are the highest since July 2009's peak of 2,772 units.

Knight Frank research head Png Poh Soon said the 17,913 units sold by developers in the first nine months of the year have already topped the previous full-year record in 2010 of 16,292. He expects that this year's total could hit 21,000 units.

Mr Lee Sze Teck, senior manager of training, research and consultancy at Dennis Wee Group, said another reason for the pick-up in sales could be the narrowing gap between resale and new prices.

Data from the Singapore Real Estate Exchange Residential Property Flash Report found resale prices of non-landed private homes had some of their strongest gains in the past year last month, up 2.5 per cent from August. In contrast, average prices in the primary new sales market fell 2.2 per cent.

The 748-unit eCO, along Bedok South Avenue 3, was the top performer, selling 402 units of the 513 launched in the month.

Last month's take-up rate exceeds the 2,224 new private units launched - a sign that "demand is still healthy enough to absorb the new supply", SLP International research head Nicholas Mak said.

Mr Lim reckons this month's volume will be lower, owing to the recent measures. But Savills research head Alan Cheong tips strong sales of up to 2,251 units excluding ECs, with strong response to projects including eCO, Skies Miltonia and Riversails.

Mr Wilfred Goh, 49, head of compliance in an insurance firm, who bought a unit at the EC,

1 Canberra, for $978,000, said: "I feel that recent launches are overpriced... this is a value buy."

tamanda@sph.com.sg

Overemphasis on "new sales" ignores the real demand, which is for occupation or tenancy. We need to look at the real demand,which is better reflected in the resale market. New sales are just for the developer to make money and for investors to 'tikam'. Even with cooling measures, people are buying not because they need a roof over the head, but because they got nowhere else to park their money "because bank interest rates are too low" (and equities are perceived as too risky).

When the supply tsunami hits in the next 2-3 years, with 50-60k units reaching completion, if there are no occupant/tenants we will see serious problems.

They just open the floor gate wider , problem ?

I guess there maybe alot of holding power in the market. Singaporeans are cash rich. If thing get worst, gov can hold back launch anytime.

SOmehow I feel that once nobody has any expectation of a correction/crash, that is when it will occur!

(17-10-2012, 02:09 PM)Musicwhiz Wrote: SOmehow I feel that once nobody has any expectation of a correction/crash, that is when it will occur!

Yes, property is really hot news every day!

I think we can't quite understand ourselves why so many people got so much money to own maybe 2 or 3 properties.

I wonder is it 'feel good' factor, or are Singaporeans really so loaded?

Few years down the road, the deaf and mute will be the winner!

(17-10-2012, 03:08 PM)etan Wrote: I think we can't quite understand ourselves why so many people got so much money to own maybe 2 or 3 properties.

I wonder is it 'feel good' factor, or are Singaporeans really so loaded?

The boom years of 05-07 and 09-11 have created property wealth for many people. Example:
1) Buy a HDB flat for $300k. Downpayment $60k, take $240k loan. When the price increases to $500k, you sell out and redeem the loan ($500k - $240k = $260k) Your $60k just became $260k in a few years. Where to live then? Stay with parents, or rent a place for the time being, or downgrade (based on the strategy of "Downgrade in an upturn, Upgrade in a downturn"). In the old days (pre 2010) you can still take 90% loans. So with $260k, you can leverage to $2.6m worth of property. So you can get 2 x $1.3m property or 3 x $800k properties. Voila!

2) Buy a condo for $600k. Same thing, loan 80% = $480k. When the price rises to $1m, you can take a term loan (aka fifth charge mortgage) to "cash out". Based on 70% LTV, you can loan out $700k, which is $220 above your existing loan outstanding (assuming you haven't paid it down much). You can then use this $220k to put downpayment for 2nd property.

This is how people leverage. Whether good or bad, it remains to be seen. Leverage works both ways, and this is one of the reasons subprime happened. But just because a knife can cut you, we don't ban knives. Many car accidents happen but we don't say cars are bad. They are just tools, it is up to us to use it wisely and prudently.

3) Many people have fat fat CPF accounts (by virtue of it being 'forced savings'). Working for 20 years, I estimate a median wage worker can easily see $200k in his OA. In the old days, CPF was even allowed to be used for commercial properties, but that loophole was closed.

So this is how people afford 2nd and 3rd properties.

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(17-10-2012, 02:00 PM)valueinvestor Wrote: They just open the floor gate wider , problem ?

Why do you say they open the floor gate wider? Who are the "they" you're referring to?

(17-10-2012, 03:08 PM)etan Wrote:

(17-10-2012, 02:09 PM)Musicwhiz Wrote: SOmehow I feel that once nobody has any expectation of a correction/crash, that is when it will occur!

Yes, property is really hot news every day!

I think we can't quite understand ourselves why so many people got so much money to own maybe 2 or 3 properties.

I wonder is it 'feel good' factor, or are Singaporeans really so loaded?

Few years down the road, the deaf and mute will be the winner!

Ha! Ha!

The deaf and mute and maybe the blind always will be the winner, at the end of the day. In the 1st place i think they got nothing much to lose.
It reminds me of the story of "Helen Keller". And many great blind musicians. Blind usually becomes very great musicians because they have no choice but to play by the ears and a lot of real feelings.
Amen.

Increase of population will also create demand . Too much idle cash park in the banks earning low interest, rich foreigners also join in the party.....................