Property market braves chill, hands in pocket

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#1
Business Times - 16 Oct 2010

Property market braves chill, hands in pocket


Sept saw fall in private homes sold by developers and more units being returned

By KALPANA RASHIWALA

THE cooling measures are leaving their mark on the property market - and the latest developer sales data for the month of September seems to underline that.

After the cooling measures were announced on Aug 30, the number of private homes sold by developers fell 27.6 per cent month on month to 911 units in September. BT's analysis also showed that at least 60 units were returned to developers in September, compared with nearly 30 units in August.

Figures released by Urban Redevelopment Authority (URA) also show that the number of private homes launched by developers slid 9.2 per cent month on month to 1,058 in September.

Property consultants readily attributed the slowdown in last month's sales to the cooling measures. Credo Real Estate executive director Ong Teck Hui says: 'I think we can expect sales to slow down further for the rest of the year due to a seasonal year-end slowdown combined with the effect of the cooling package.'

Property consultants are predicting that between 1,000 and 2,000 private homes (excluding executive condos) could be sold in the current quarter. That could still take the full-year tally to over 14,000 units.

Knight Frank managing director (residential services) Peter Ow suggests that those who returned units to developers last month were more likely to have been short-term investors worried that the market would collapse. 'At that point (when the measures were introduced on Aug 30), the downside risks were a lot higher than any price upside. What's walking away and forfeiting 1.25 per cent of the purchase price compared with being caught by a turn in the market?' he said.

'But now some of these people may go back to the market again. Sentiment has improved slightly this month,' he added.

BT's analysis showed that 13 units were returned to the developer for The Scala at Serangoon Avenue 3 last month, which had been fully sold by the end of August. Of these, 12 units were again sold by the developer, leaving only one unit available at end-September in the 468-unit condo.

Other projects with units surrendered last month include The Greenwich in the Seletar/Yio Chu Kang area (seven units), Cyan at Bukit Timah/Keng Chin roads (five units), Jardin along Dunearn Road (five units) and Waterfront Gold along Bedok Reservoir (six units). The Cascadia, Stevens Suites and Tivoli Grande were among the projects which had a unit returned each.

Analysts point out that the actual number of units given back to developers may have been higher, with the number offset by some of these units being again sold by the developer during the month.

A market watcher acknowledged that 'there was a spike in units returned in September but we're seeing a levelling-off in returns'.

Developers' top-selling project in September was the 99-year-leasehold NV Residences in Pasir Ris, with 347 units sold at a median price of $859 per square foot (psf). This was followed by the freehold Vacanza @ East in the Kembangan area with 89 units transacted at $1,107 psf median price.

CB Richard Ellis executive director Li Hiaw Ho noted that projects with small-format apartments continued to do well in September, thanks to their location and affordable absolute price quantum - such as Jupiter 18, Dorsett Residences and ISuites @ Marshall.

In terms of per square foot pricing, the most expensive unit sold by a developer last month was an apartment at The Orchard Residences which was sold at $4,258 psf. Another three units were also sold at Tomlinson Heights (the former Beverly Mai site) at $3,060 psf (median price).

While the number of homes sold in the Core Central Region and the Rest of Central Region fell about 49 per cent and 59 per cent respectively month on month in September to 84 units and 226 units, sales in the Outside Central Region rose nearly 10 per cent to 601.

'This is contrary to market expectation that the cooling measures would have greater impact on sales of mass-market homes,' says Colliers International director Tay Huey Ying.

Developers have sold 3,723 units in Q3 2010, taking the tally for the first nine months of this year to 12,136 units. This compares with 12,828 units in the same period last year and 14,688 units in the whole of last year.

URA will release the final developer sales figure for Q3 2010 on Oct 22, which may be slightly different as it will take into account, among other things, options which are not exercised.

Market watchers point out that the 911 units sold last month still represented a decent showing, coming in above the 847 units for June (when sales slowed down due to eurozone woes and the World Cup season).

Jones Lang LaSalle's SE Asia research head Chua Yang Liang went so far as to say that the latest set of cooling measures on Aug 30 this year fell short of the first set unveiled in September last year in terms of moderating developers' sales volume.

Based on his analysis of the weighted sales volume 30 days before and after the date of intervention, the latest measures led to a 24 per cent drop in sales volume compared with a 33 per cent decline when the first set of measures was announced in September 2009.

'The numbers suggest that the initial shock of government policies is over as the market adjusts to a stricter regulatory environment each time,' he adds.

DTZ's SE Asia research head Chua Chor Hoon suggests that while the measures are cooling sales volumes, they're unlikely to make a significant dent in prices as interest rates remain low and the economy is still growing.

Knight Frank's Mr Ow expects developers to proceed to launch mass and mid-market projects 'as there's still good demand. It's a matter of whether pricing is reasonable.'

'For the high-end and luxury markets, I believe they'll be more careful about releasing new projects just yet as the buyers have not yet returned, especially foreign purchasers,' he adds.

My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#1
Business Times - 16 Oct 2010

Property market braves chill, hands in pocket


Sept saw fall in private homes sold by developers and more units being returned

By KALPANA RASHIWALA

THE cooling measures are leaving their mark on the property market - and the latest developer sales data for the month of September seems to underline that.

After the cooling measures were announced on Aug 30, the number of private homes sold by developers fell 27.6 per cent month on month to 911 units in September. BT's analysis also showed that at least 60 units were returned to developers in September, compared with nearly 30 units in August.

Figures released by Urban Redevelopment Authority (URA) also show that the number of private homes launched by developers slid 9.2 per cent month on month to 1,058 in September.

Property consultants readily attributed the slowdown in last month's sales to the cooling measures. Credo Real Estate executive director Ong Teck Hui says: 'I think we can expect sales to slow down further for the rest of the year due to a seasonal year-end slowdown combined with the effect of the cooling package.'

Property consultants are predicting that between 1,000 and 2,000 private homes (excluding executive condos) could be sold in the current quarter. That could still take the full-year tally to over 14,000 units.

Knight Frank managing director (residential services) Peter Ow suggests that those who returned units to developers last month were more likely to have been short-term investors worried that the market would collapse. 'At that point (when the measures were introduced on Aug 30), the downside risks were a lot higher than any price upside. What's walking away and forfeiting 1.25 per cent of the purchase price compared with being caught by a turn in the market?' he said.

'But now some of these people may go back to the market again. Sentiment has improved slightly this month,' he added.

BT's analysis showed that 13 units were returned to the developer for The Scala at Serangoon Avenue 3 last month, which had been fully sold by the end of August. Of these, 12 units were again sold by the developer, leaving only one unit available at end-September in the 468-unit condo.

Other projects with units surrendered last month include The Greenwich in the Seletar/Yio Chu Kang area (seven units), Cyan at Bukit Timah/Keng Chin roads (five units), Jardin along Dunearn Road (five units) and Waterfront Gold along Bedok Reservoir (six units). The Cascadia, Stevens Suites and Tivoli Grande were among the projects which had a unit returned each.

Analysts point out that the actual number of units given back to developers may have been higher, with the number offset by some of these units being again sold by the developer during the month.

A market watcher acknowledged that 'there was a spike in units returned in September but we're seeing a levelling-off in returns'.

Developers' top-selling project in September was the 99-year-leasehold NV Residences in Pasir Ris, with 347 units sold at a median price of $859 per square foot (psf). This was followed by the freehold Vacanza @ East in the Kembangan area with 89 units transacted at $1,107 psf median price.

CB Richard Ellis executive director Li Hiaw Ho noted that projects with small-format apartments continued to do well in September, thanks to their location and affordable absolute price quantum - such as Jupiter 18, Dorsett Residences and ISuites @ Marshall.

In terms of per square foot pricing, the most expensive unit sold by a developer last month was an apartment at The Orchard Residences which was sold at $4,258 psf. Another three units were also sold at Tomlinson Heights (the former Beverly Mai site) at $3,060 psf (median price).

While the number of homes sold in the Core Central Region and the Rest of Central Region fell about 49 per cent and 59 per cent respectively month on month in September to 84 units and 226 units, sales in the Outside Central Region rose nearly 10 per cent to 601.

'This is contrary to market expectation that the cooling measures would have greater impact on sales of mass-market homes,' says Colliers International director Tay Huey Ying.

Developers have sold 3,723 units in Q3 2010, taking the tally for the first nine months of this year to 12,136 units. This compares with 12,828 units in the same period last year and 14,688 units in the whole of last year.

URA will release the final developer sales figure for Q3 2010 on Oct 22, which may be slightly different as it will take into account, among other things, options which are not exercised.

Market watchers point out that the 911 units sold last month still represented a decent showing, coming in above the 847 units for June (when sales slowed down due to eurozone woes and the World Cup season).

Jones Lang LaSalle's SE Asia research head Chua Yang Liang went so far as to say that the latest set of cooling measures on Aug 30 this year fell short of the first set unveiled in September last year in terms of moderating developers' sales volume.

Based on his analysis of the weighted sales volume 30 days before and after the date of intervention, the latest measures led to a 24 per cent drop in sales volume compared with a 33 per cent decline when the first set of measures was announced in September 2009.

'The numbers suggest that the initial shock of government policies is over as the market adjusts to a stricter regulatory environment each time,' he adds.

DTZ's SE Asia research head Chua Chor Hoon suggests that while the measures are cooling sales volumes, they're unlikely to make a significant dent in prices as interest rates remain low and the economy is still growing.

Knight Frank's Mr Ow expects developers to proceed to launch mass and mid-market projects 'as there's still good demand. It's a matter of whether pricing is reasonable.'

'For the high-end and luxury markets, I believe they'll be more careful about releasing new projects just yet as the buyers have not yet returned, especially foreign purchasers,' he adds.

My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
Reply
#2
In other words / summary, what the article is trying to say in a roundabout way is that the speculators were slight scared when the cooling measures were introduced, but now they have adjusted to the cooling measures and are back into the market again and thus expect prices to remain high and go even higher.

Great! for the speculators. Sucks for the rest.
Reply
#2
In other words / summary, what the article is trying to say in a roundabout way is that the speculators were slight scared when the cooling measures were introduced, but now they have adjusted to the cooling measures and are back into the market again and thus expect prices to remain high and go even higher.

Great! for the speculators. Sucks for the rest.
Reply


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