Wednesday, May 28, 2008

Govt Rolls Out Two Industrial Sites

Source : The Business Times, May 28, 2008

THE government continues to roll out new sites for sale against the backdrop of a quieter market.

The latest to be offered are two industrial sites - a confirmed list plot in Woodlands with Business 2 zoning being launched for tender, and a smallish plot at Kallang Pudding Road for Business 1 use that is now open for application under the reserve list.

Both sites are being offered on 60-year leasehold tenures and have 2.5 plot ratio (ratio of maximum potential gross floor area to land area).

Colliers International director (industrial) Tan Boon Leong predicts the 61,757 sq ft Kallang Pudding site, located in the established MacPherson/Al- junied industrial belt, will attract more attention with bids likely to be around $90-100 per square foot of potential gross floor area.

In contrast, the 180,835 sq ft plot at Woodlands Industrial Park E5 may fetch bids of only about $20 to $25 psf per plot ratio (psf ppr), Mr Tan reckons.

He notes that a 30-year leasehold site next door was sold last year for about $28 psf ppr but that was with a lower plot ratio of 1.0.

'The latest plot has the highest plot ratio for an industrial site offered by the government in the Woodlands area since 2000. Industrialists generally don't like operating in high-rise industrial facilities - because of the inconvenience and time consumed in moving goods and people up and down - especially in outlying areas like Woodlands and Tuas.

'So the developer of this site may not be inclined to build up to the maximum plot ratio of 2.5, especially given rising construction costs. Any potential bidder will ask himself: 'Should I bid high for the land and take a risk to build something industrialists may not like?'

With a Business 2 zoning, the site can be developed for a wide range of uses such as clean/light industry, general industry and warehouse.

'The site is near established industries specialising in auto parts, hardware, furniture, scrap metal and waste management,' Urban Redevelopment Authority said.

The tender for the Woodlands plot closes on July 22.

The Kallang Pudding Road plot, despite its triangular shape, is expected to be hotly contested.

'It is suitable for development into an upscale flatted factory and sold on a strata-titled unit basis. The plot is very close to the main trunk road in the area - Aljunied Road,' Mr Tan said.

The Business 1 zoned plot can be put to clean and light industrial, and warehouse use.

Parkway Life To Acquire Nursing Homes In Japan

Source : The Business Times, May 28, 2008

A MONTH after making its maiden foray in Japan, Parkway Life Reit has agreed to buy another two properties there for a total of 2.62 billion yen (S$34.3 million).

The target acquisitions are a nursing home in Yokohama City and another in Osaka's Ibaraki City. Both are owned by vendor ZECS Community Co, which has agreed to lease them back for 15 years with an option for a further five years. Its parent company Zecs Co will guarantee the leases.

At a price of 1.44 billion yen, the Yokohama facility has a net operating income yield of 6.1 per cent. The freehold, five-storey building is next to a scenic canal. It has 74 lettable units spread over a gross floor area of 3,273 sq m.

The Ibaraki nursing home is in a four-storey, 50-year leasehold property beside the University of Osaka and Ibaraki Country Club. It has a lettable area of 3,706 sq m and 94 units. At 1.18 billion yen, its net operating income yield is 6.7 per cent.

Explaining the acquisitions, Justine Wingrove, CEO of the Reit's manager Parkway Trust Management, said demand for quality nursing homes in Japan will grow with the ageing population. 'By 2050, it is estimated that one in three Japanese will be over 65,' she noted.

Rents at both properties are index-linked to Japan's inflation rate on an upward-only basis. Rents may also be revised by mutual agreement at five-year intervals.

Expected to be completed this month, the investments will be made through special purpose vehicle Parkway Life Japan2, a wholly owned subsidiary of Parkway Life Reit. They will be funded by debt, raising the Reit's gearing to 11 per cent from 8 per cent.

ZECS Community operates 30 nursing homes in Japan under the Bon Sejour brand. The leases are also protected by a back-up agreement with Japan Care Service Co, another operator of nursing homes.

Parkway Trust Management did not say how much the acquisitions will add to the Reit's distribution per unit (DPU). 'As the deal size is only $35 million, the increase to DPU is not significant,' said Ms Wingrove.

Last month, the Reit made its first investment in Japan - a pharmaceutical warehousing and distribution facility in Chiba that cost 2.59 billion yen.

Following yesterday's announcement, Parkway Life Reit ended one cent higher at $1.23.

UBS Investment Research On Singapore Residential Market - 23rd May 2008

CapitaLand Issues Hold Firm Despite Souring Property Views

Source : The Business Times, May 28, 2008


BEARISH reports put out recently by analysts on the Singapore property market have failed to dampen traders' appetite for covered warrants issued on property counters by foreign banks.

Yesterday, a call warrant issued by Deutsche Bank (DB) on CapitaLand rose two cents to 21 cents on a hefty volume of 10.7 million shares. In contrast, the mother share stayed flat at $6.30, with 5.25 million shares traded.

Traders were attracted by the warrant's relatively long shelf life of five months and a strike price of $6.9289 which works out to a small premium over current market prices. 'Well, I guess it boils down to how traders view the property market going forward,' said a dealer.

Investors could be betting on the residential property market making a comeback in the second half, he said.

However, not all analysts are quite so confident. Barclays Capital and Credit Suisse recently forecasted that rents and prices might drop by up to 40 per cent in the next two years.

But UOB Kay Hian sniffed fresh investment opportunities in property stocks, arguing that they had already corrected 45 per cent from their mid-2007 peaks.Property counters, as a group, had also underperformed the Straits Times Index by 20 per cent in the past year, it added. As such, it has argued that the market had already 'over-discounted' the negative prospects of the property sector and advised investors to load up on them instead.

But there are others who are urging caution. Tracking the trading patterns of top property giant executives will shed insight on how these insiders view the market.

They noted that on May 16, CapitaLand chief executive Liew Mun Leong sold 500,000 shares at $6.87 apiece and another 300,000 shares at $6.88 each.

Even though Mr Liew has made a regular practice of cashing in on his stock options and selling the resulting shares, it still stirred a debate among traders. 'If there is upside, surely, even Mr Liew will want to wait to get a better price,' one dealer said.

Nassim Condo Turns In Surprisingly Good Sales

Source : The Straits Times, May 28, 2008


A LUXURY condominium in the posh Nassim area has turned in surprisingly good preview sales, even as property analysts are predicting a sharp slowdown in the high-end home segment.

Buyers have taken up 38 units at Nassim Park Residences, forking out a whopping $10 million or more for each apartment, sources said.

The 100-unit development, which United Overseas Land (UOL) is building on the former Nassim Park site in Nassim Road, is understood to be priced upwards of $3,000 per sq ft (psf).

The project consists of only four-bedroom and penthouse apartments. Each of the four-bedders is believed to be at least 3,000 sq ft in size, while the penthouses are between 6,000 sq ft and 7,000 sq ft.

UOL declined to comment on the figures yesterday, but sources said the developer might not release some of the units and instead keep them for its own use.

Nassim Park Residences is the first major luxury development to be released for sale this year. Most other launches, especially large, high-end ones, have been held back as developers wait out the market gloom.

Elsewhere, some smaller projects have also seen brisk sales after discounts were offered. Over the Vesak Day weekend, Macly Group sold 60 per cent of the 102-unit Vutton in Novena at a 10 per cent discount off list prices, or about $1,100 psf to $1,400 psf.

Picking The Best Home Loan Package

Source : The Business Times, May 28, 2008

Be aware of your financial needs and risk appetite while weighing home loan packages, writes HELEN NEO

WHILE owning a home is high on the must-have list for Singaporeans, the fact is buying a property usually means signing on for a mortgage. As banks compete for a larger share of the home loan market, borrowers are sometimes overwhelmed by the multitude of home loan packages, with differing features that cater to the different needs of homebuyers.

Not all homebuyers are savvy about all these features. Thus, it has become challenging for homebuyers to decide which loan best suits their needs. Here we show what is available in the market and discuss the advantages and disadvantages of each type of loan package.

Interbank-pegged vs home loan board rate (variable)

Features of interbank-pegged home loan

# Pegged to Singapore Interbank Offered Rate (Sibor) or Swap Offered Rate (SOR) plus margin.

# The Sibor or SOR can be easily obtained from the newspapers.

# Sibor or SOR will be fixed for a period depending on interest period used and will change at rollover/maturity date.


# Transparent: Your home loan interest rate moves in line with the market interest rate.


# Volatile: Although interbank rates move daily, interest rates will only be repriced according to the interest period used, eg, for a three-month Sibor repricing is done once every quarter.

# Pre-payment and redemption inflexibility: Prepayment or redemption for interbank-pegged packages are usually permitted only on rollover/maturity dates. Otherwise, a break fund cost may be imposed. This applies even if you had taken up a package with no lock-in period.

# Administrative hassle: For those using the Central Provident Fund to service their monthly instalments, there are administrative issues to consider. As interbank rates are subject to frequent rate adjustments, this results in frequent changes to monthly instalments. For each change, customers would have to instruct the CPF Board to revise the monthly CPF amount released for servicing the loan. This results in inconvenience to customers, particularly if CPF funds are used in full for the payment of monthly instalments. Customers may need to update the board as often as once every three months.

Features of home loan board rate (variable)

# Not pegged directly to any interbank rates.

# Derived from overall bank funding costs (including business costs) from different sources. Maybank's home loan board rate is benchmarked against interbank rates, market conditions, as well as business costs. This may differ for other banks. How often it is revised depends on each individual bank's review of its portfolio against its benchmarked/reference market rates and business costs.


# Not as volatile as interbank-pegged home loan packages.


# Not as transparent as interbank-pegged rates. Each bank has its own way of computing its board rate(s).

# Multiple board rates: Different board rates may be introduced at different times.

Home loan board rate (variable) vs fixed rates

Features of home loan board rate (variable)

# With or without lock-in, there is a margin charged on top of the respective banks' board rate.

# Favoured by rate sensitive customers who also prefer more certainty in rates.

# Favoured by investors mostly on no lock-in variable packages so that they can get out of the loan anytime without any penalty.

Features of fixed rates

# Banks generally offer a choice of fixed rates for one to three years.

# Interest rate certainty during the fixed period.

# Favoured by risk-averse customers and those too busy to monitor their loan.

Not all customers will choose the lowest home loan interest rate package since much will depend on the needs and risk profile of the customers. For example, a young couple with no children and few financial commitments may consider taking on more risks compared to another with more financial commitments.

As for the choice between board rates and interbank pegged rates, this is very subjective. Some borrowers do not like the interbank pegged rates due to their volatility, but some like it because it is transparent.

Board rates usually lag behind in adjustment compared to interbank pegged rates because the bank will adjust them only after serious consideration of all factors (including interbank rate movements).

Looking at risk appetite, a person who cannot tolerate risk is likely to select a fixed rate package where they are able to determine with certainty the total monthly instalments they have to pay. Those likely to fall into this category are:

# Young couples starting a family with a relatively high level of gearing to manage.

# Older borrowers who do not like uncertainty in their financial commitments.

On the other hand, a person is likely to select an interbank-pegged interest rate if he has a higher risk appetite. The interbank rates are currently low and hence attractive; but it is also subject to market forces.

This uncertainty is translated to a different monthly instalment every few months. The effect is a fluctuating financial commitment during the loan tenure. Over time, the averaging effect may neutralise the low interest rates currently enjoyed.

The key is the option to exit the home loan when interest rates are on the uptrend. However, this option is not always available due to considerations such as a lock-in period, claw back period, income stability, and loan quantum.

Our take is that every loan package is designed to meet the needs of a particular customer segment. As a home loan buyer, you are making a decision for a long-term loan of say, 20 to 30 years. Be aware of your own financial needs before committing to a loan. Banks are generally more than willing to explain the differences between various loan packages and to analyse which is more suitable for your needs.

Helen Neo is head, consumer banking, Maybank Singapore.

The Hong Kong Tycoon And His Female Friend

Source : TODAY, Wednesday, May 28, 2008

Family feud ends as real estate boss is replaced by his mum HONG Kong real estate giant Sun Hung Kai Properties has ousted Mr Walter Kwok (picture) as its chairman, replacing him with his 79-year-old mother after a high-profile feud at the family-run firm.

“The board announces that Mr Walter Kwok has ceased to be the chairman and chief executive of the company and has been redesignated as a non-executive director,” the firm said in a regulatory filing with the Hong Kong Exchange.

Mdm Kwong Siu-hing, the widow of the company’s former chairman and co-founder, Mr Kwok Tak-seng, will become chairman, the statement said. She has over 40 years of experience in the real estate business, the company said.

Mr Walter Kwok’s brothers, Raymond and Thomas, both vicechairmen and managing directors of the firm, will jointly assume the role of chief executive.

The ouster comes a day after Mr Walter Kwok, who has been on leave from the company since February, failed in a last-ditch legal bid to try and prevent the board meeting from going ahead.

Mr Walter Kwok had accused his two brothers Raymond and Thomas of falsely asserting that he had a mental disorder, court documents showed. According to the documents, the three brothers had been in disagreement since May last year over the company’s leasing of properties, land purchases and the appointment of directors.

The rift was reportedly caused by Walter’s involvement with a female friend whom it was alleged had become increasingly influential on the married tycoon and his firm.

With a market capitalisation of about HK$328 billion ($57.2 billion), Sun Hung Kai Properties is one of the world’s largest real estate firms, making its fortune by investing in Hong Kong before more recently expanding to the mainland.— AGENCIES

Parkway Life Reit puts in $35m to tap the silver dollar

Source : TODAY, Wednesday May 28, 2008

SINGAPORE-LISTED Parkway Life Reit is investing in the silver dollar. It is pumping $35 million to jointly buy two nursing homes in Japan.

By 2050, it is estimated one in three Japanese people will be over 65 years of age.

“The demand for good quality nursing homes is expected to grow as the population ages,” said Parkway Life’s chief executive Justine Wingrove.

This is Parkway Life’s first foray into the nursing home business. One home is in Yokohama City and the other in Osaka. Both are being bought under a sale and leaseback agreement with nursing home operator ZECS Community for 15 years with an option to extend for an additional five years. And both are expected to be yield accretive to the trust.

“We like these investments as the underlying income streams are index-linked to inflation and there are rent reviews every five years,” Ms Wingrove said.

Pulau Pisang Is Ours: M’sia

Source : TODAY, Wednesday May 28, 2008

Malaysia takes steps to claim 100 isles and reefs after Pedra Branca ruling

KUALA LUMPUR — Malaysian reports have declared that another island — on which Singapore operates a lighthouse — will not end up like Pedra Branca, even as the Kuala Lumpur takes steps to claim 100 isles and reefs.

There is no danger of losing Pulau Pisang to Singapore as Malaysia clearly has sovereignty over Pulau Pisang, Johor’s Chief Minister was quoted as saying by The Star newspaper yesterday.

Pulau Pisang is about 15km off Johor in the Straits of Malacca.

Johor Chief Minister Abdul Ghani Othman said ownership of Pulau Pisang was based on a treaty between Sultan Ibrahim of Johor and the British in 1900, which clearly stated that Malaysia had sovereignty over the island. “Our land office records show that Pulau Pisang belongs to Johor,” he said.

A 16-metre lighthouse on the island is managed by the Maritime and Port Authority of Singapore.

Mr Abdul Ghani said the lighthouse guided ships into the Singapore Straits and was manned by four Singaporean guards.

He noted that Malaysians were allowed to enter the island but were prohibited from entering the lighthouse. There are also more than 80 farmers on Pulau Pisang, who work there.

The Chief Minister’s announcement came as The New Straits Times (NST) reported that government agencies are working to gather information on islands and marine features that could be eyed by neighbouring countries.

As the claim of ownership extends beyond islands to marine features such as reefs and rock formations visible only during low tide, the number could exceed thousands.

The NST report quoted a maritime expert as saying the most urgent cases to be verified were about 100 isles, reefs, rocks and other marine features lying in the South China Sea, Straits of Malacca and off Sabah. China, Vietnam and Indonesia are said to be among the claimants.

The expert, who was not named in the report, added that collection of data in such cases was crucial. “If other countries start to claim our property, we will be in better position as we would have the data.”

Meanwhile, Malaysian opposition lawmakers yesterday protested in Parliament against the loss of Batu Puteh, which Singapore calls Pedra Branca. Last Friday, the International Court of Justice (ICJ) ended a 28-year dispute over Pedra Branca by zuling that Singapore has jurisdiction over it.

Opposition MPs stood up in protest after Parti Islam SeMalaysia’s (PAS) motion to debate the ICJ ruling was rejected yesterday by Speaker Pandikar Amin Mulia, who said Malaysia had accepted the results on Batu Puteh.

PAS officials in Johor have also lodged a police report against former Foreign Minister Syed Hamid Albar, Mr Abdul Ghani and Attorney-General Abdul Gani Patail accusing them of causing Malaysia to lose Batu Puteh.

“Malaysia should not have placed the case before ICJ without the necessary evidence,” Malaysian analyst Khoo Kay Peng said, referring to a statement made by Malaysian ambassador-at-large Abdul Kadir Mohamad previously.

In the statement, Mr Abdul Kadir said he could not locate a letter sent by a British governor in Butterworth to the Johor Temenggong seeking permission to build the Horsburgh Lighthouse on Batu Puteh. Mr Khoo said: “Abdullah might have wanted to have the case settled as soon as possible to help warm bilateral ties, but it is not doing any good for his political career.”

Mid-Tier, Upscale Hotels Faring Best: STB Figures

Source : The Straits Times, May 28, 2008

For first time, data groups hotels into classes, shows their performance

MID-TIER and upscale hotels have fared best among different types of hotels in the current tourism boom.

The Singapore Tourism Board (STB), releasing the latest tourism statistics here, has grouped the hotels into four classes and released figures on their performance for the first time.

The four are:

# Luxury hotels: those in prime locations or historic buildings (4,500 rooms);

# Upscale hotels: boutique hotels and those in prime locations, charging slightly lower rates (12,400 rooms);

# Mid-tier hotels: those in commercial zones (9,500 rooms); and

# Economy hotels: those with budget rooms in outlying districts (3,800 rooms).

The STB declined to cite examples of hotels in each category, but going by its descriptions of each, luxury hotels include the likes of The Ritz-Carlton Millenia; upscale ones include Orchard Hotel; mid-tier hotels cover Link Hotel in Tiong Bahru and economy hotels include Hotel Bencoolen.

Going by STB figures, upscale and mid-tier hotels did best in average room occupancy, average room rate and revenue per available room last month.

Among the four categories, upscale hotels saw the biggest jump in revenue from each available room - 27.9 per cent - from a year ago.Revenue per available room is calculated by multiplying average room occupancy by average room rate.

Mid-tier hotels had the biggest increase in average room rates, up 28.2 per cent over last April's.

Mr Colin Tan, director of research and consultancy at Chesterton International, said the sound performance by mid-tier and upscale hotels could have come from the room crunch and higher demand for these hotels.

The average hotel occupancy rate stood at 84 per cent last month, at an average room rate of $254. Hotels are expected to earn $186 million from their rooms, up 30.1 per cent from last April.

Knight Frank director of research and consultancy Nicholas Mak, noting an uptrend across all four hotel categories, said that, by releasing such data, the STB is helping investors judge the industry's state and decide which categories are worth putting money into.

Chesterton International's Mr Tan surmised that the recent 'no-bid' situation for a 0.9ha Little India hotel site could have spurred the STB to make this information part of its monthly updates.

The plot above Little India MRT station made the news last week as the first instance in seven years where a government land tender failed to draw bids.

Mr Tan said one reason could be that the site is suitable for mid-tier or budget accommodation and developers had the idea returns on these types of hotels are lower.

However, he added, with STB information that all sectors are doing well, investors may be spurred to take up non-prime land to build non-luxury hotels.

The STB confirmed it made the data available 'to facilitate their business and investment decisions'.

Fuelling the growth of hotels is a rise in the number of tourists. Last month was another sterling month, with 826,000 arrivals: Indonesians led the charge with 131,000, followed by 107,000 Chinese, 63,000 Australians and about the same number of Indians, and 53,000 Malaysians.

Parkway Life REIT Investing In Two Nursing Homes In Japan

Source : Channel NewsAsia, 27 May 2008

Parkway Trust Management, the manager of Parkway Life Real Estate Investment Trust, is investing in two nursing homes in Japan for some S$34m.

One of the homes is located in Yokohama City, Kanagawa Prefecture and the other is in Ibaraki City, Osaka.

The vendor of both properties is nursing home operator ZECS Community Co.

Under the sale and leaseback agreements, ZECS CC will lease back 100 percent of the space at each property for 15 years, with an option to extend the leases for an additional five years.

Parkway says demand for high-quality nursing homes is expected to soar in a country where more than a quarter of all Japanese will be at least 65 years old by 2025.

It expects to fund both investments by debt, which will increase the REIT's gearing from 8 percent to 11 percent.

The investments are expected to be completed on May 30. - CNA/ir

URA Releases 2 Sites At Woodlands, Kallang Pudding Road For Sale

Source : Channel NewsAsia, 27 May 2008

The Urban Redevelopment Authority (URA) has launched an industrial site at Woodlands Industrial Park E5 for sale by public tender.

The site has an area of 1.68 ha and is zoned for a Business 2 development. The tender for the site will close at noon on July 22.

The URA also released the detailed sales conditions for a reserve list site at Kallang Pudding Road for industrial development. The 0.57 ha site is zoned for a Business 1 development.

Businesses are grouped under Business 1 and Business 2 zones, according to their impact on the environment.

Under the government's reserve list system, a site on the reserve list would only be put up for tender if a developer's indicated minimum bid price in his application is acceptable by the government.

Both sites have a gross plot ratio of 2.5 and have a lease period of 60 years. - CNA/so

Restoration Work Underway At Cornwall Gardens Road

Source : Channel NewsAsia, 27 May 2008

The Land Transport Authority (LTA) has said expects one lane of Cornwall Gardens Road to be opened this Friday.

LTA said its inspection of the area is complete and reassures the public that buildings in the area are safe.

The family that has moved to the hotel since the incident has returned home. Telecommunications network to the area is up and running as well.

Cornwall Gardens Road has been blocked off since part of it caved in due to the MRT Circle Line construction.

Although tunnelling work in the area has stopped, LTA said the incident will not affect the Circle Line's construction schedule. - CNA/so

Hong Kong Giant Sun Hung Kai Ousts Chairman After Feud

Source : Channel NewsAsia, 27 May 2008

HONG KONG: Hong Kong's largest property firm Sun Hung Kai said Tuesday it had ousted Walter Kwok as its chairman, replacing him with his 79-year-old mother after a high-profile feud at the family-run firm.

"The board announces that Walter Kwok has ceased to be the chairman and chief executive of the company and has been redesignated as a non-executive director," the firm said in a statement to the Hong Kong Stock Exchange.

Kwong Siu-hing, the widow of the company's former chairman Kwok Tak-seng, will become chairwoman, the company statement said.

The ouster comes the day after Walter Kwok, who has been on leave from the company since February, failed in a last-ditch legal bid to try and prevent the board meeting.

Kwok has accused his brothers Raymond and Thomas, both vice-chairmen and managing directors of the firm, of falsely asserting that he had a mental disorder, court documents showed.

The rift was reportedly caused by Walter's involvement with a female friend whom it was alleged had become increasingly influential on the married tycoon and his firm.

Sun Hung Kai is one of the world's largest property firms, making its fortune by investing in the southern Chinese city's property market before more recently expanding to the mainland. - AFP/ac

Greenspan Says US Recession Still Probable

Source : Channel NewsAsia, 27 May 2008

LONDON: A recession in the United States remains a probability, former Federal Reserve chairman Alan Greenspan said in an interview published Tuesday.

Speaking to the Financial Times from Washington, Greenspan said he believed "there is a greater than 50 percent probability of recession."

He noted, however, that "that probability has receded a little".

The likelihood of a severe recession had "come down markedly", he added: but it was too soon to tell whether the worst was already over.

According to the Financial Times, Greenspan estimated that house prices in the United States would drop by a further 10 percent from their levels in February, which comes to a 25 percent drop from their peak.

"Such house price declines imply a major contraction in the level of equity in owner-occupied homes, the ultimate collateral for mortgage-backed securities," he said.

US economic growth has slowed dramatically in recent months and a growing number of economists believe the world's largest economy will experience a recession during 2008 amid a housing slump and related credit crunch. - AFP/ac

US New Home Sales Rrise 3.3% In April

Source : Channel NewsAsia, 27 May 2008

WASHINGTON: Sales of new homes across the United States rose an unexpected 3.3 percent in April from the prior month, to a seasonally-adjusted annual pace of 526,000 homes, a government report showed on Tuesday.

The spike in sales confounded most economists forecasts of a sales decline last month.

New home sales in March, however, were revised lower to 509,000 properties compared with an initial tally of 526,000, according to the Commerce Department survey.

Although activity rose over the month, sales of new homes in the 12 months to April have dived a hefty 42 percent in the midst of a persistent housing market slump.

Turnover of new homes has fallen steadily in the past two years, excepting some month-on-month gains, amid one of the worst US housing market downturns in decades.

The housing meltdown has been exacerbated in the past nine months by a broad credit crunch which has swept through the banking sector, making it harder for Americans to obtain mortgages and credit.

A report on Friday showed that sales of existing homes, which represent a much larger wedge of the overall housing market than newly built properties, fell one percent during April from March to a seasonally-adjusted annual rate of 4.89 million properties.

"New home sales are still at a very weak level, but better-than-feared news has provided a bullish catalyst for a (stock) market coming off a bad week last week," analysts at said.

The median sales price of new houses sold in April rose 9.1 percent compared with March to 246,100 dollars, marking the highest median price level since November of last year.

The improvement in overall new home sales marked the highest level of sales since February, but sales have tumbled sharply from the market's red-hot days in late 2005 and early 2006 when over one million new homes on a seasonally-adjusted basis were being bought each month.

The ongoing housing slump started in the first half of 2006 and has been buffeting the world's largest economy despite aggressive interest rate cuts by the Federal Reserve.

A growing deluge of home foreclosures also is weighing down the market as some homeowners have failed to keep up with their mortgage repayments amid the slowing economy.

Some home builders have responded to the slump by slashing prices on new homes. Others have sought to entice potential buyers with competitive financing assistance, or by offering upgraded kitchens, flat-screen televisions and other marketing goodies.

The Commerce Department report also showed that the average sales price of a new home in April was 321,000 dollars, marking a 10 percent gain from a month earlier.

New home sales increased in most regions of the country last month.

Sales of new homes rose in the Northeast, Midwest and West of the country, but fell in the South which includes the state of Florida where property sales have fallen especially hard, partly in the wake of a construction frenzy.

Real estate agents say home sales traditionally improve during the spring and summer compared with winter months when bad weather can deter people from shopping for a new home.

Builders trimmed 1.5 percent off the glut of unsold homes to 454,000 properties, leaving them with an 10.6-month supply and not far short of March's revised 11.1 month overhang. - AFP/de