Private Resale Home Prices Up In Q2, Says DTZ

Source : The Business Times, July 4, 2009

12.8% increase in average price of 2-bedroom units; firm expects full-year primary market sales to top 2006 figure of 11,147 units

THE average price of freehold non-landed resale private homes in prime districts 9, 10 and 11 increased 11.3 per cent to $1,247 per sq foot in the second quarter from Q1, says DTZ.

This followed a 3.7 per cent quarter-on-quarter (q-o-q) price fall in Q1.

Two-bedroom units posted a 12.8 per cent q-on-q gain in Q2, as their lower quantum prices stimulated interest among people hoping to own prime district property.

But DTZ considers the Q2 price gain a blip supported by buyers' fears of missing the bottom, pent-up demand and low interest rates - rather than economic fundamentals.

As for primary market sales, the property firm is now projecting that developers' private home sales for the whole of 2009 are likely to surpass the 11,147 units achieved in 2006, which was the second-highest performance after the 14,811 homes they sold in 2007.

In the first six months of this year, the tally was about 6,700 to 6,900 units.

DTZ's figures also show the average price of luxurious non-landed resale homes rose 9.6 per cent q-o-q to $2,060 psf in Q2.

Outside the prime districts, the average resale price of 99-year leasehold homes rose 3.2 per cent q-o-q to $573 psf in Q2, as prices had fallen less and there are fewer 'specu-vestors' in this segment.

Earlier this week, the Urban Redevelopment Authority's flash estimate showed the overall private home price index declined 5.9 per cent in Q2 from Q1.

Despite DTZ's figures showing an increase in resale prices of non-landed homes in Q2, DTZ's head of South-east Asia Research Chua Chor Hoon said: 'Without a clear recovery in sight for the US and Singapore economies, the price recovery in Q2 2009 is not sustainable and sales volume would be affected if prices continue to rise.'

She noted that average resale prices have fell only 10-35 per cent between Q4 2007 and Q1 2009, compared with the fall of 35-45 per cent from the Q2 1996 peak to the Q4 1998 Asian financial crisis trough.

The number of caveats lodged for resales and sub-sales in April and May this year exceeded that for the whole of Q1 by 70 per cent. The proportion of foreign buyers, excluding Singapore permanent residents, rose from 5 per cent in Q1 to 8 per cent in April and May.

Indonesians and Malaysians accounted for 49 per cent of caveats lodged in April and May by foreigners and Singapore PRs, compared with 40 per cent in Q1.

Sub-sales and resales are secondary-market transactions. Sub-sales involve projects that have yet to obtain a Certificate of Statutory Completion (CSC), while resales relate to projects that have received CSC.

Meanwhile, as new supply came on stream amid waning demand, rents continued to fall in Q2, although at a slower pace than in Q1.

The average rental value of prime district homes slipped 9.1 per cent to $3.32 psf per month in Q2, after a 16.2 per cent slide in Q1.

Rents for luxury homes were the hardest hit, with a 10.6 per cent decline to $4.65 psf per month - back to their Q4 2005 level.