For Every HIGH, There's A LOW

Source : Weekend TODAY,July 28, 2007

Clearer details in Q2 property picture

HAD you been out looking for a place to rent or buy in the second quarter of this year, you would have found a number of good deals — the hot property market notwithstanding.

For instance — going by figures from the Urban Redevelopment Authority (URA) — one lucky owner snapped up a unit at The Raintree in Bukit Timah for $489 per square foot (psf). Units at Mariam Way’s Ballota Park were rented out for as low as $1.29 psf a month.

Or, according to the Housing and Development Board (HDB), you could have bought a 5-room flat in Yishun for $273,800, or rented a four-room flat for anywhere between $1,000 and $1,400.

On the other hand, were you a landlord, you would have profited from the 18.7-per-cent surge in private home rents in the first six months of the year.



Apartment and condominium owners made 8.4 per cent more selling their units between April and June. Landed home sellers, who saw prices go up just 2.9 per cent in the first quarter, enjoyed a 7.1-per-cent surge this time.

On Friday, the HDB and the URA released the most detailed results ever of the property landscape, to give the public a more complete picture of its highs and lows — offsetting recent media reports that have focussed on the extreme highs.

For first time, the URA published new rental sub-indices for non-landed private housing across the three regional groupings, to reflect trends in different segments of the market. The HDB also took the unprecedented step of breaking down, by town nd flat type, the median subletting rents as well as differences between resale price and market value.

THE PRIVATE HOME SCENE While overall prices of private homes went up 8.3 per cent, he URA stressed that the boom was not uniform.

Many uncompleted private residential projects in the suburban areas with “more affordable” prices were on tap, it pointed out. A “significant number” of units — 1,658 in all — languish unsold in many launched projects.

The number of new homes sold set a quarterly record of 12,897 units. But what seems significant is that speculators were not a big segment.

Sales of uncompleted homes, or sub-sales, are often used to measure speculative activity in the private home market.

Across the island, these accounted for 9.7 per cent of total sales — which pales in comparison to the 28-per-cent mark when speculation was rife in 1996 over the same period.

The bulk of the sales, or 42.4 per cent, were in suburban areas — a signal that the mass market has recovered, said a CB Richard Ellis report.

For the first time since 2005, too, price growth was led by non-landed homes in areas such as Marine Parade, Queenstown and Toa Payoh.

The en bloc frenzy, meanwhile, helped drive up private home rents by 10.4 per cent — the highest since the URA made such data publicly available, said a Knight Frank report.

But the windfall, again, was not even across the board. While the overall median monthly rental in Singapore rose to $2.17 psf, a number of properties were rented out at less than $1.50 psf.

Meanwhile, prospective homebuyers can look forward to a fat pipeline of supply over the next three years. There are 56,182 uncompleted units due to hit the market. Another 9,100 new units are expected from sites made available under the Government land sales programme and the three residential sites at Bishan, Dakota Crescent and oodsville Close sold earlier this year.

THE HDB MARKET
HDB flat resale prices grew by 3 per cent on the whole, up from just 1.4 per cent the previous quarter.

While record-setting prices made the headlines, overall, the median amount by which actual resale prices exceeded market value was a modest $7,000.

In fact, 30 per cent of all resale transactions were priced at or below valuation — although in some instances, such as in Clementi where executive flats were sold at a median $65,000 above valuation, prices were grossly inflated.

Overall, activity was high in the resale market, with 8,708 deals being struck — a 38-per-cent increase over the first quarter.

Rentals also remained “affordable”, despite a recent newspaper report that HDB rents had hit a 10-year high. The URA said these “very high” rents were limited to “very few” cases and were “confined to flats with special attributes”.

There was a 50-per-cent jump in the number of sublet approvals issued by HDB, after it eased up on its subletting policy in March. In all, about 14,600 HDB flat owners have approval to sublet their flats.

WHAT’S AHEAD?
Given the rapid heating up of private home prices, property analysts are projecting that these could go up by as much as 30 per cent by the year’s end.

CB Richard Ellis expects a total increase of 20 to 25 per cent for the year, with the number of new home sales hitting 16,000 to 18,000.

The forecast at Knight Frank was 23 to 30 per cent, but it is rentals that are expected to boom — growing by 30 to 40 per cent year-on-year, especially in prime districts. This, said the Knight Frank report, is due to a shrinking pool of housing as a result of recent collective sales.

ERA Singapore, which specialises in the HDB market, expects flat resale prices to rise by 8 to 10 per cent over the whole year, and the number of transactions to hit over 30,000.

“Home-buyers priced out of the private property market will be looking at larger flat types ... They in turn will push those that are priced out of buying larger flats to buy smaller, four-room types,” said ERA vice-president Eugene Lim.

But, he added, “to enjoy a premium above market valuation, the property must have the X-factor”: A combination of a central location, being relatively new and “nicely renovated”, having an MRT station nearby, and being on “a high floor with unblocked panoramic views”.

For more data, go to: www.ura.gov.sg/real_estate/main.jsp for private property, and www.hdb.gov.sg for public housing.