Lower prices, pent-up demand drive surge in sales of private homes
The current recession-defying surge in home sales is being driven by pent-up demand from local buyers with enough savings to swoop on lower-priced units and a determination to invest or upgrade.
These buyers are not acting on impulse but have been saving up for years.
Another key factor is the fear of missing the boat ahead of another property boom, The Straits Times has found after speaking to buyers and market analysts.Last month, an all-time record of 1,825 private homes were sold, continuing a major upswing that started in February. The June figure exceeded that of August 2007 – the height of the last property boom.
On recent weekends, showflats have been crammed with families, couples and singles. Some want to buy a condo as an investment with prices still quite low; others wish to upgrade from HDB flats.
A few others have been renting condos in the hopes of picking up a bargain later, while another group is just browsing.
“I think that now is the right time,” said investor Therence Tay, an engineering firm owner in his 30s who bought a two-bedroom-plus-study unit at Changi condo The Gale on Sunday. He lives with his family in an HDB flat.
On average, such a unit is about 1,120 sq ft with a price tag of about $770,000, based on a price range of $650-$725 per sq ft (psf).
Mr Tay said in Mandarin that he had slogged for over a decade to save enough cash. “Interest is very low from bank savings now, so we might as well put our money somewhere more useful,” he said.
A company chief operating officer, who asked to be known only as Mr Chan, 51, said he is in the middle of negotiations to buy a unit at Bukit Timah Road condo Ferrell Residences, where units are 1,840 sq ft on average and cost at least $3 million.
The Singapore permanent resident is mainly using his cash savings to buy the investment property. He will live there alone; his family lives overseas.
“I missed the boat in the last boom,” he said. “By the time I decided to buy, prices were already $1,800-$2,000 psf. By then it was out of reach, and I was kicking myself very hard.”
Property consultants say a combination of pent-up demand and lower prices has sparked this strong sales streak, in contrast to the previous boom.
“The last property boom was fuelled by foreign demand for luxury and high-end homes from investors and speculators, which eventually filtered down to the mid- and mass-market segments,” said Colliers International property consultant Tay Huey Ying.
Dr Chua Yang Liang of Jones Lang LaSalle said: “Some upgraders were excluded from the market during the last property boom due to high prices and there appears to be a correction now.”
Ms Chua Chor Hoon, a property consultant at DTZ Debenham Tie Leung, noted that the price gap between HDB flats and condos has narrowed.
For instance, an executive HDB flat in a prime location like Bishan costs up to $650,000, while some suburban condos with facilities are about the same price.
HDB upgrader Abdullah Muhamad, 50, a supervisor, who has a wife and four children, said that he wanted to buy a condo for his family while prices were still affordable.
He had saved for 20 years before buying a two-room condo unit on Sunday at Oasis@Elias in Pasir Ris, which had 190 visitors that day. Units there are going for $670 psf on average. Mr Abdullah’s unit cost him about $640,000.
“We liked the facilities here, and were worried that property prices will increase further,” Mr Abdullah said.
Executive HDB flats in Pasir Ris have sold for over $500,000 in the past three months.
Also waiting for a good buy is Dr Phoon Kok Fai, 56, a professor at the Singapore Management University who is currently renting a condo.
He did not buy a unit in the last boom as he had other financial considerations on his plate then. But this year, Dr Phoon has set his sights on a Ferrell Residences unit, which he plans to move into with his wife.
“This condo is within my reach and I have the security of a good location with reasonable value. I also sense that real estate prices have bottomed out,” he said.
Many others have enough cash and are interested, but are in no rush. “In the last few weeks, buying sentiment has been very strong, but there is no panic,” said Mr Eugene Lim of property firm ERA Singapore.
“We can afford to wait,” said prospective investor Raymond Ting, 40, who works in building maintenance and lives in a condo with his wife and 10-year-old son.
“I expect prices to drop because there are so many new developments being released. What goes up will come down.”
Profile of showflat visitors
1 PURE INVESTORS
Many investors have been waiting for an opportunity to jump into the property market - but timing is everything, and they have been waiting until the price is right.
Mr Ashok Veerappan, a 56-year-old manufacturing executive, wants to buy a unit at Parc Imperial on Pasir Panjang Road as an investment. One-bedders of about 400 sq ft cost around $550,000.
Some investors are in no hurry to buy. Ms Eunice Lee, 39, a customer service professional, is keen to invest but is holding back as she expects prices to fall further.
Another investor, Mr Chan, in negotiations to buy a condo unit, said banks are paying little interest. 'Stocks are volatile but real estate is quite stable. I don't think prices will go down because external investors from countries like Indonesia and China are still there,' he said.
2 RENTERS
Many of those who are renting their current premises and other first-time buyers are also considering buying property despite the downturn.
Condo renter Sundaresan N., 46, a bank employee, recently visited The Peak @ Balmeg showflat.
A three-bedroom 1,500 sq ft apartment costs about $1.4 million.
'Rents have gone up so much, so it makes sense to buy, but I will buy only if the price is right - I have no problem waiting and trying to squeeze a lower rent out of my landlord.' He has been seriously searching for six months.
Mr Eddie Koh, 40, who owns a cleaning company, is renting a condo unit but is thinking of buying his own place to live in. 'If prices are not very high, then it's worth it, like now,' he said in Mandarin.
3 HDB UPGRADERS/LONG-TERM INVESTORS
Some HDB upgraders want to buy property for both residential and investment purposes. Mr H.G. Cheng, a regional sales executive in his 40s, is keen to buy a unit soon and live there. 'I'll see in two to three years' time whether to rent it out or stay on. If the price is high, I'll sell it, otherwise I will live in it myself.'
He was viewing a showflat at Double Bay Residences in Simei, where units range from $850,000 for a three-bedder to $1 million for a four-bedder.
Mr E.C. Ho, 48, a construction industry worker, said his plan to buy a home is unrelated to the economy. 'We are half-upgrading and half-investing. My family of three live in an HDB flat and we are considering buying a condo now only because we didn't have enough money before,' he said.
4 BROWSERS/SHOWFLAT-HOPPERS
Amid the furious buying, many people are just browsing at the showflats, curious about the recent property launches.
'We happened to see so many developments all of a sudden, and thought we might as well look for one as a long-term investment and upgrade,' said Ms Eileen Chua, a childcare centre worker in her late 40s with two teenage children.
Mr K. Leong, a 32-year-old banker who was at The Gale, is keen to buy but added: 'I'm just trying to see the market pricing. There is a perception that the economy is getting better and that is probably why everyone is buying right now.'
MELISSA TAN & SMITA KRISHNASWAMY
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