Dismal Private Property Sales Despite Lower Prices

Source : TODAY, Tuesday, June 17, 2008

PRIVATE property sales by developers remained weak last month, with 441 units sold.

That may be up 55 per cent from the 284 units sold in April, but over 3,000 new units remained unsold. That was despite developers cutting their prices for homes in 18 developments last month. Median prices for The Verve along Jalan Rajah, for example, dropped 17 per cent from $1,187 per sq ft (psf) in March to $985 psf in May.

Mr Colin Tan, Chesterton International’s research and consultancy head, said: “Presently, the market is dominated by investors rather than owner-occupiers because current price levels are beyond the affordability of most owner occupiers.

“To nibble at this investors’ market, developers will have to lower prices and have to continue to lower them to sustain sales,” he said. “A one-off price reduction may generate some sales but it will stagnate once that segment with that certain level of risk appetite is secured or captured.”

Some developments still saw fairly good sales last month. DTZ Debenham Tie Leung’s research senior director Chua Chor Hoon named Vutton at Akyab Road and Orchard Scotts as examples, but noted that some developers were holding off from new launches.

Property analysts expect smaller listed developers to lower prices first, as they will be under pressure to boost earnings.

As for leasing, Cushman and Wakefield’s Singapore managing director Donald Han said: “Contrary to the widely held perception that the rental market is still hot, it has already stabilised. The overall vacancy level is slowly rising as more units are completed.”