Private Home Sales Recover In Weak Market

Source : The Straits Times, April 16, 2008

301 units, excluding exec condos, sold in March; worst first quarter since 2003

PRIVATE home sales last month rebounded from February, but taken as a whole, the first quarter was the worst since Sars wreaked havoc on sales in 2003.

A total of 301 residential units, excluding executive condominiums, were sold last month, according to data released yesterday by the Urban Redevelopment Authority. In February, 174 units were sold.

This puts first-quarter private home sales at 795 units, compared to 427 units in the corresponding period in 2003.

In the previous quarter ended Dec 31 last year, 1,449 units were sold. While sales rose last month, the take-up rate of launched units remained similar to that in February, consultants say.

The take-up rate outside the central region in places such as Buangkok and the East Coast remained soft and could lead to a supply overhang, said Dr Chua Yang Liang, Jones Lang LaSalle's head of research for South-east Asia.

Prices remained generally weak last month, he added.

Using just the lowest median price category - more reflective of underlying market sentiment - prices outside the central region fell 9 per cent to $648 per sq ft (psf) last month, from $712 psf in February, said Dr Chua.

But high-end projects in posh areas posted a 6.4 per cent rise in the lowest median price to $1,621 psf last month, he added.

Dr Chua said developers are more upbeat about mass-market projects than buyers - evident from the number of launches and the recent strong bidding for suburban government land.

Buyers are cautious, as the economy is expected to slow in the coming months, he said.

Indeed, there will be launches at 'more realistic prices', said one developer.

CBRE Research executive director Li Hiaw Ho said activity may pick up in the current quarter in terms of project launches, but buyers' response will be 'price-sensitive'.

Sales this quarter may improve and top 1,000 units, as larger-scale suburban projects will be launched, he added.

But Knight Frank director of research and consultancy Nicholas Mak expects sales to stay thin in the coming months due to ongoing economic and financial market uncertainties.

'Homebuyers, especially in the mass-market segment, are expected to remain cautious until there is a sustained recovery in the financial markets and economic conditions,' he said.

Still, there are glimmers of hope. Yesterday, a government tender for a Toa Payoh condo site attracted four bids, with the top one from ChoiceHomes Investments coming in at a relatively strong $460 psf.

CBRE's Mr Li said the top bid would translate to a break-even of at least $850 psf and a possible sale price of about $950 psf to $1,000 psf.


CAUTIOUS OUTLOOK

'Homebuyers, especially in the mass-market segment, are expected to remain cautious until there is a sustained recovery in the financial markets and economic conditions.'

MR NICHOLAS MAK, Knight Frank's director of research and consultancy