Friday, July 24, 2009

Mass Market Property Sector Prices Could Rise 10% By Year End

Source : , 23rd July 2009

Mass market private condominiums have seen strong take-up rates despite the recession, with HDB upgraders forming the bulk of buyers.

And analysts say prices of these properties could shoot up to new highs by the end of the year.

What's driving the demand for this segment in the property market, and how long will the bullrun last?

Last month, when the 8 @ Woodleigh condominium in Potong Pasir was launched, all 330 units were sold out in two weeks, making up a fifth of all private property sales for June.

Other mass market projects have also seen healthy numbers --

Livia in Pasir Ris has seen 88 percent of its launched units taken up so far, Double Bay Residences in Simei posted 89 percent and Kovan Residences recorded 94 percent.

The prices of these properties mostly range between 600 and 800 dollars per square foot, but a few new launches have priced their units above 900 dollars per square foot.

With demand reaching fever pitch, Managing Director of Reyfern Real Estate Consultancy, Reymond Fernandez, says prices of such properties could rise by as much as 10 percent by the end of the year, to record levels.

"The acceleration has been tremendous, it's been very unexpected because the economy is not doing so well, we're talking about unemployment figures increasing. Where the support level is coming from, it's hard to establish. But I think the sentiment seems positive and people are buying and they see more people buying and more people going in so the crowds are drawing more people in itself."

Independent property analyst Nicholas Mak says there are various factors propping up the strong demand -- low interest rates on housing loans, consumer optimism that the economic upturn is returning soon and a belief that an investment in real estate would be a good hedge against future inflation.

But he warns that the bullrun in the mass market property sector can only last as long as developers stay attuned to their buyers, who are mostly HDB upgraders.

"One must not forget that buyers of entry-level or mass market condominiums are very price-sensitive. Once prices go above 1.2 million dollars, such buyers tend to retreat to the sidelines or to look for cheaper alternatives."

Nonetheless, Mr Mak expects demand for mass market properties to remain at current levels for the rest of the year, especially if the economy is seen to make a sustainable recovery.

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