Developers offer soft discounts, for example, by absorbing legal fees
Private home prices are falling - and they will fall even more next year.
Property developers may disagree, but there is no question about it, if you ask industry observers.
The economy has slowed considerably and there have been retrenchments and wage cuts.
The Novelty Group has cut its price for the 75-unit Luma at River Valley Grove from $2,800 psf to $1,450 psf to tempt buyers. -- BT PHOTO: JOSEPH NAIRSales volume of new homes looks set to reach an 18-year low this year, while supply is far from lacking.
'In every bear market, no matter what the developers say, it will happen,' Mr Leong Sze Hian, the president of the Society of Financial Service Professionals, said of the price falls.
The only unknown, he added, is the extent of the fall.
Manpower Ministry data already shows that average monthly real earnings - pay minus the effect of inflation - fell by 17 per cent from $3,982 in the first quarter to $3,307 in the third quarter.
Also, on an annualised quarter-on-quarter basis, gross domestic product growth in the third quarter declined by 6.8 per cent, continuing the 5.3 per cent contraction experienced in the second quarter.
'All these will filter through to the property market,' said Mr Leong.
Right now, most buyers are remaining on the sidelines. New launches are few, and there are not many desperate sellers out there yet.
'Most are not feeling any pain from the recession yet. In the secondary market, many sellers are still hoping to do sub-sale at a profit,' said Knight Frank's director of research and consultancy, Mr Nicholas Mak.
The result? There are no major price reductions yet, he said.
Going forward, though, there could be more speculators desperate to get rid of their properties because they do not want to be saddled with huge loans, experts say.
These are people who bought properties when the market was booming under the deferred payment scheme, which means they will have to pay the full sum for the property upon completion.
The Government has said some 10,450 units of private homes sold under the deferred payment scheme have yet to be completed. Some 2,540 units - largely bought during last year's boom - will be completed in 2010.
In the new homes market, there will be more new property launches or re-launches after Chinese New Year late next month, consultants say.
Frasers Centrepoint, for one, has plans to release Caspian, its 700-unit condo near the Lakeside MRT station.
'The smaller projects or those in less attractive locations will likely need to offer more discount,' said Mr Mak.
'Others may offer soft discount, so that the prices reflected in the caveats will not be reduced.'
Soft discounts can take the form of furniture vouchers or the absorption of legal fees or stamp duty.
There could be price cuts in some mid-tier or prime developments where prices are 'fairly toppish', Mr Mak said. 'They would, thus, have to adjust their prices to a more reasonable level.'
Novelty Group, for one, last month cut its price for the 75-unit Luma at River Valley Grove from $2,800 per sq ft (psf) to $1,450 psf.
Recently, City Developments adjusted its price for the 77-unit Shelford Suites in Shelford Road to $1,400 psf from a preview price of $1,600 psf on average in June. The price then was already lower than expected, as two units were sold in March at $1,869 psf and $1,905 psf.
Those seeking information on new launches can check out the Urban Redevelopment Authority's (URA's) website, which offers monthly sales and price data on the 15th of every month.
It shows the number of units sold in the past month, as well as the median, lowest and highest prices done.
The URA website also has information on individual caveats lodged for properties sold, so you can find out the prices done at a particular condo.
The problem here is that the information is not very up-to- date because deals take time to complete and caveats take time to lodge.
The price data can easily be two to three months old, which can be a long time in today's fast-moving market.
Potential buyers should check with their agents to ascertain the previous price levels done or check classified advertisements for the latest asking prices, experts say.
They should also try to get a bank valuation on the property they are eyeing, said HSR Property Group executive director Eric Cheng.
Those who want to buy a resale property now can bid below individual sellers' asking prices. They could aim for 5 per cent to 8 per cent below asking levels, said Mr Cheng.
Also, buyers should look for tenanted resale properties that can offer a 4 per cent to 5 per cent rental yield for at least the next year, said Mr Ku Swee Yong, the director of marketing and business development at Savills Singapore.
'In today's market, it is wise to buy something that you can see and profit from immediately,' he said.
The risk with new projects is that they could be delayed or their prices could fall from today's levels, he said.
But, be prudent and patient, warned Mr Cheng. 'Don't buy on impulse.'
Buying opportunity
Those who want to buy a resale property now can bid below individual sellers' asking prices. They could aim for 5 to 8 per cent below asking levels, said HSR Property Group executive director Eric Cheng.
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