Source : The Straits Times, Jan 3, 2009
Economic slowdown expected to lead to people downgrading later in year
PRICES of HDB resale flats have continued to rise even as the economic downturn takes its toll on jobs, wages and private home prices.
But analysts warn this recent steady rise may not last long.
According to flash estimates of HDB's Resale Price Index released yesterday, prices of flats in the fourth quarter of last year rose 1.5 per cent over the preceding quarter.
This figure is considerably lower than the 4.2 per cent increase in the third quarter, and it is the first time that growth has dipped below 3 per cent in six months, said real estate agency PropNex.
But while average prices of HDB resale flats are now at an all-time high, property analysts say that they are likely to dip some time this year.
'Sentiment is pretty soft as many people are taking a wait-and-see approach,' said Mr Eric Cheng, executive director of HSR Property Group. 'If prices dip, they will do so in the second and third quarters of this year.'
Mr Eugene Lim, associate director of ERA Asia Pacific, said: 'With the economy likely to contract further and more layoffs expected in the months ahead, home buyers have become very practical.
'In uncertain times, home buyers go for a 'safer' option - HDB flats - to lessen the financial burden. This is especially so for the 'sandwiched' class that may find private housing a little too stretched for their comfort.'
Mr Nicholas Mak, Knight Frank's director of research and consultancy, said: 'Buyers are increasingly cautious and prefer to purchase HDB flats instead of private homes to limit their exposure to the uncertain market. A number of homeseekers are re-aligning housing requirements from aspirations to functional needs.'
He expects prices to remain flat in the current first quarter, and overall prices to drop 5 to 10 per cent in the full year.
'At the moment, there are still people who need homes. But the economic slowdown and job losses will eventually cause some people to downgrade from larger flats to smaller ones, and only by the second quarter will we start to see a pronounced rate of decline,' he added.
PropNex chief executive Mohamed Ismail is slightly more optimistic.
'If the economy does not improve... there will be more downgraders and cautious home buyers in the wake of retrenchments and tighter budgeting. If more people shy away from the bigger flats above the $500,000 mark, it's just a matter of time before prices dip.'
'Clarity will come in the second half of the year. But we should still see overall average growth of between 3 and 5 per cent in 2009.'
What seems certain to decline, however, are cash-over-valuations (COVs).
'The days of transactions with above $50,000 COV are over. Remote exceptions are well-renovated flats with unobstructed, panoramic views,' said ERA's Mr Lim.
Mr Ismail agreed: 'Today, the bigger flats that are valued at $500,000 and above on the resale market can sit without a buyer for two to three months. The en bloc frenzy of last year has already dwindled, affecting the demand for the bigger flats.'
Added Mr Lim: 'We are thus likely to see the COV statistics continue to decline in the coming quarters.'
Sunday, January 4, 2009
Private Homes Continue Freefall; HDB Prices Hold Up
Source : The Straits Times, Jan 3, 2009
The fourth quarter's 5.7 per cent drop is the sharpest in a decade
THE deepening economic crisis sent private home prices plunging 5.7 per cent in the fourth quarter of 2008 - the steepest drop in a decade.
The dramatic fall has effectively brought an end to Singapore's four-year property rally as prices had already dived 2.4 per cent in the previous quarter as jittery buyers flee the market.
Prices for 2008 overall are down 4.3 per cent compared with 2007, according to flash estimates from the Urban Redevelopment Authority (URA) yesterday.
This is a striking turnaround from the 31.2 per cent spike in private home prices in 2007, the peak of the boom.
But Housing Board (HDB) flats continue to buck the trend, climbing 1.5 per cent in the fourth quarter following a 4.2 per cent increase in the third.
This means HDB resale flat prices have reached a new peak since the 1996 high.
Prices rose 13.9 per cent in 2008, building on the 16.6 per cent increase in 2007.
Analysts say the gloomy economic outlook has turned home-buyers even more cautious, leading to a fall in demand even as developers begin to soften prices of new launches. Potential buyers are waiting on the sidelines in anticipation of further price cuts, said CBRE Research executive director Li Hiaw Ho.
Prices for apartments in the core central area suffered the most - down 6.3 per cent in the three months to Dec 31, while those in the rest of the central area slipped 5.5 per cent. This follows declines of 2.7 per cent and 2.4 per cent respectively in those areas in the third quarter.
But the falls in some prime projects were even more severe. CBRE's Mr Li said the luxury segment has taken a hammering with projects under construction falling 30 to 35 per cent in prime districts 9 and 10, while those in Marina Bay and Sentosa Cove fell 10 to 13 per cent.
The URA's website showed home prices at Ardmore Park, for example, declining around 30 per cent, from an average of almost $3,000 psf in February to March, to around $2,115 psf in December.
Prices of suburban homes fared better. They were down 4.7 per cent in the fourth quarter, following a 1.5 per cent drop in the previous three months.
ERA Asia Pacific associate director Eugene Lim said prices of such homes have already dipped to 'very reasonable levels, due to recent launches where developers were sensitive to the poor economy'.
Mr Lim also felt that the drop in private home prices - the largest since the last quarter of 1998 - proves that 'fire sales' have started as sellers look to bail out and raise cash amid the recession.
Knight Frank's director of research and consultancy, Mr Nicholas Mak, said the decline of median prices of sub-sales - 10.6 per cent in the third quarter and 7.5 per cent in fourth quarter - confirms this theory, based on his firm's analysis.
Take Sentosa's The Azure. The median subsale price in the fourth quarter was $1,200 psf, down from around $1,700 psf in the previous two quarters, said Mr Mak. That means a 1,300 sq ft flat that cost $2.21 million might now go for just $1.56 million.
The URA recently revealed that about 10,450 unfinished homes were sold under deferred payment, which allows buyers to postpone payments until projects are completed. This has raised concerns that such homes are at risk of default or distressed sales if prices fall more.
The URA and HDB flash estimates were based on transactions in the first 10 weeks of the fourth quarter. They will be updated in four weeks.
The head of research and consultancy at Chesterton Suntec International, Mr Colin Tan, said December's transactions could render the final figure two to three percentage points worse than the estimate.
CB Richard Ellis predicts prices will fall 10 to 15 per cent this year and Knight Frank tips falls of 13 to 20 per cent.
Meanwhile, analysts say that most developers can hold off launches over the short to medium term if necessary.
Yet the market is not short of buyers and investors out for bargains, said ERA's Mr Lim. 'While the immediate future may be bumpy, we are confident there is light at the end of the tunnel.'
The fourth quarter's 5.7 per cent drop is the sharpest in a decade
THE deepening economic crisis sent private home prices plunging 5.7 per cent in the fourth quarter of 2008 - the steepest drop in a decade.
The dramatic fall has effectively brought an end to Singapore's four-year property rally as prices had already dived 2.4 per cent in the previous quarter as jittery buyers flee the market.
Prices for 2008 overall are down 4.3 per cent compared with 2007, according to flash estimates from the Urban Redevelopment Authority (URA) yesterday.
This is a striking turnaround from the 31.2 per cent spike in private home prices in 2007, the peak of the boom.
But Housing Board (HDB) flats continue to buck the trend, climbing 1.5 per cent in the fourth quarter following a 4.2 per cent increase in the third.
This means HDB resale flat prices have reached a new peak since the 1996 high.
Prices rose 13.9 per cent in 2008, building on the 16.6 per cent increase in 2007.
Analysts say the gloomy economic outlook has turned home-buyers even more cautious, leading to a fall in demand even as developers begin to soften prices of new launches. Potential buyers are waiting on the sidelines in anticipation of further price cuts, said CBRE Research executive director Li Hiaw Ho.
Prices for apartments in the core central area suffered the most - down 6.3 per cent in the three months to Dec 31, while those in the rest of the central area slipped 5.5 per cent. This follows declines of 2.7 per cent and 2.4 per cent respectively in those areas in the third quarter.
But the falls in some prime projects were even more severe. CBRE's Mr Li said the luxury segment has taken a hammering with projects under construction falling 30 to 35 per cent in prime districts 9 and 10, while those in Marina Bay and Sentosa Cove fell 10 to 13 per cent.
The URA's website showed home prices at Ardmore Park, for example, declining around 30 per cent, from an average of almost $3,000 psf in February to March, to around $2,115 psf in December.
Prices of suburban homes fared better. They were down 4.7 per cent in the fourth quarter, following a 1.5 per cent drop in the previous three months.
ERA Asia Pacific associate director Eugene Lim said prices of such homes have already dipped to 'very reasonable levels, due to recent launches where developers were sensitive to the poor economy'.
Mr Lim also felt that the drop in private home prices - the largest since the last quarter of 1998 - proves that 'fire sales' have started as sellers look to bail out and raise cash amid the recession.
Knight Frank's director of research and consultancy, Mr Nicholas Mak, said the decline of median prices of sub-sales - 10.6 per cent in the third quarter and 7.5 per cent in fourth quarter - confirms this theory, based on his firm's analysis.
Take Sentosa's The Azure. The median subsale price in the fourth quarter was $1,200 psf, down from around $1,700 psf in the previous two quarters, said Mr Mak. That means a 1,300 sq ft flat that cost $2.21 million might now go for just $1.56 million.
The URA recently revealed that about 10,450 unfinished homes were sold under deferred payment, which allows buyers to postpone payments until projects are completed. This has raised concerns that such homes are at risk of default or distressed sales if prices fall more.
The URA and HDB flash estimates were based on transactions in the first 10 weeks of the fourth quarter. They will be updated in four weeks.
The head of research and consultancy at Chesterton Suntec International, Mr Colin Tan, said December's transactions could render the final figure two to three percentage points worse than the estimate.
CB Richard Ellis predicts prices will fall 10 to 15 per cent this year and Knight Frank tips falls of 13 to 20 per cent.
Meanwhile, analysts say that most developers can hold off launches over the short to medium term if necessary.
Yet the market is not short of buyers and investors out for bargains, said ERA's Mr Lim. 'While the immediate future may be bumpy, we are confident there is light at the end of the tunnel.'
Saturday, January 3, 2009
When A Price Fall Isn't A Price Fall
Source : The Business Times, January 3, 2009
SISV Services is fixing problem with caveats lodged for some subsale deals.
PRIVATE home prices have fallen but in some cases, the drop may not be as much as suggested by SISV Services' Realink database.
SEEING DOUBLE Savills Singapore has spotted more than 60 instances of 'duplicate caveats' listed at different prices for the same transaction on Realink -- STOCK.XCHNG
Savills Singapore has spotted more than 60 instances of 'duplicate caveats' listed at different prices for the same transaction and which give the impression of a unit changing hands within a span of a few months at a significantly lower price, when in fact it hadn't.
The common thread running through these cases is that they involved subsale deals transacted in the past six months for projects which either received Temporary Occupation Permit in 2008 or are nearing TOP.
For example, Realink shows a caveat for a 47th floor unit at The Sail @ Marina Bay sold in the subsale market in September for $508,024 or $858 psf, when actually the unit was sold for $1.45 million or $2,450 psf and which was caveated three months earlier (and also shown in Realink). The lower price was the price at which the developer first sold the unit back in 2005.
In another instance, Realink shows a caveat for a unit at Park Infinia at Wee Nam in November for $1.16 million or $868 psf, one-third lower than the $1.77 million or $1,325 psf caveat lodged for the same unit two months earlier. Actually, both caveats were lodged by the same buyer, who paid the higher price.
Rodyk & Davidson LLP partner Tang Woon Ee told BT that it was 'good practice' to advise clients who buy in the subsale market to lodge two caveats. The first is when the buyer exercises his subsale option and has to fully pay up the initial 5 per cent deposit; this caveat will reflect the actual transacted price.
Then, two or three months later, when this subsale transaction is completed and the buyer enters into a fresh sale and purchase agreement (SPA) with the developer, the buyer should lodge another caveat to protect his interest in the unit. This fresh SPA will reflect the original price at which the developer sold the unit, since this is the price it is entitled to collect.
'So if the developer originally sold the unit to Buyer 1 for $1 million and Buyer 1 later sells to Buyer 2 in the subsale market for $1.2 million, the fresh SPA issued by the developer to Buyer 2 will still reflect the $1 million price; the profit (or loss) made by Buyer 1 from his subsale transaction is not relevant to the developer,' Ms Tang explained.
As a result, the original sale price of the unit gets reflected in the second caveat lodged by the purchaser in the latest subsale deal. In this instance, two caveats will be lodged by Buyer 2 for the same transaction - the first at $1.2 million followed by another a few months later at $1 million.
SISV's Realink database, by listing both caveats, gives the impression that the price of the unit has fallen about 17 per cent in the past three months.
Said Ms Tang: 'A caveat is a legal claim against a property. When the developer issues a fresh SPA to a buyer who picked up his unit in the subsale market, it establishes a relationship between the buyer and the developer - that's a caveatable interest.'
SISV Services is in the midst of rectifying the problem, which has been caused by the service provider not eliminating 'duplicate caveats' lodged for subsale transactions which show the original price at which the developer sold the unit a few years ago (and which is listed in the fresh Sale & Purchase Agreement issued by the developer to the latest subsale buyer).
An SISV Services spokesman attributes the problem in Realink to an increase in subsale cases involving projects originally sold on deferred payment schemes (DPS) as the original buyers who may have picked up their units from developers a few years ago are now feeling the pinch from the economic downturn and facing difficulty getting bank loans.
This has led to an increase in subsales being registered and duplicate caveats showing up, according to him.
To fix the problem, SISV Services has added a 'history' button, next to transactions with two or more caveats lodged, for the professional version of Realink. 'Users can view the caveats' history and if they see the latest price is identical to the initial transaction in the primary market say a couple of years ago, they can disregard the latest caveat as being a 'duplicate',' the spokesman said.
'For the free version of Realink available to the public, we are in the process of devising a computer programme to help us identify the duplicates, so we may remove them.
'We didn't remove the duplicate caveats earlier because we could not determine readily that they were 'duplicates' as we do not have the buyers' names in the raw caveats data that we buy from SLA (Singapore Land Authority).'
Savills Singapore compiled a list of over 60 subsale transactions covering projects like The Sail, Cosmopolitan, The Esta, Park Infinia at Wee Nam, The Sea View, The Azure, Watermark, The Calrose and Parc Emily where Realink's database showed latest caveats at significantly lower prices than caveats lodged for the same units just a few months earlier. Typically, the latest caveated price was also the original transacted price for the unit a few years ago.
Savills did individual searches for a few of these cases using Singapore Land Authority's Inlis system and, in each instance, found two caveats being lodged for the property by the same buyer, just a few months apart - and with the second caveat at a lower price than the first.
Raw caveats data that SISV Services purchases from SLA does not contain information on the buyers' or sellers' identities to protect privacy.SLA confirmed that it provides identical data to both SISV Services and the Urban Redevelopment Authority.
Interestingly, URA's Realis system does not list these 'duplicate caveats' that do not reflect the latest transacted prices.
When asked how it sifts out caveats lodged when developers issue a fresh SPA based on original sale price, a URA spokeswoman said: 'If a caveat is lodged against a developer, we will ascertain whether it is a new sale or a fresh agreement arising from a subsale.
'We do this by checking whether a caveat for the same unit has been lodged against the sub-seller, whether a previous caveat has been lodged for the unit when it was originally sold and also against our database on new sales compiled from monthly surveys of developers. If the caveat is lodged against a developer arising from a sub-sale, we will not show the record in Realis.'
On the duplicate caveats in SISV Services' Realink database, Savills Singapore director for investment sales and prestige homes Steven Ming said: 'Analysts who do not distil the information carefully can come to very wrong conclusions of the market, thus further aggravating the already weak market conditions.
'Had end-users, investors and property owners relied on such data without first seeking a professional opinion, they can easily be making a misinformed decision as a result.'
There may also be a minority of rogue agents who may use such erroneous low-priced caveats to their advantage in convincing less savvy owners to close on low offers given market conditions, he added.
SISV Services is fixing problem with caveats lodged for some subsale deals.
PRIVATE home prices have fallen but in some cases, the drop may not be as much as suggested by SISV Services' Realink database.
SEEING DOUBLE Savills Singapore has spotted more than 60 instances of 'duplicate caveats' listed at different prices for the same transaction on Realink -- STOCK.XCHNGSavills Singapore has spotted more than 60 instances of 'duplicate caveats' listed at different prices for the same transaction and which give the impression of a unit changing hands within a span of a few months at a significantly lower price, when in fact it hadn't.
The common thread running through these cases is that they involved subsale deals transacted in the past six months for projects which either received Temporary Occupation Permit in 2008 or are nearing TOP.
For example, Realink shows a caveat for a 47th floor unit at The Sail @ Marina Bay sold in the subsale market in September for $508,024 or $858 psf, when actually the unit was sold for $1.45 million or $2,450 psf and which was caveated three months earlier (and also shown in Realink). The lower price was the price at which the developer first sold the unit back in 2005.
In another instance, Realink shows a caveat for a unit at Park Infinia at Wee Nam in November for $1.16 million or $868 psf, one-third lower than the $1.77 million or $1,325 psf caveat lodged for the same unit two months earlier. Actually, both caveats were lodged by the same buyer, who paid the higher price.
Rodyk & Davidson LLP partner Tang Woon Ee told BT that it was 'good practice' to advise clients who buy in the subsale market to lodge two caveats. The first is when the buyer exercises his subsale option and has to fully pay up the initial 5 per cent deposit; this caveat will reflect the actual transacted price.
Then, two or three months later, when this subsale transaction is completed and the buyer enters into a fresh sale and purchase agreement (SPA) with the developer, the buyer should lodge another caveat to protect his interest in the unit. This fresh SPA will reflect the original price at which the developer sold the unit, since this is the price it is entitled to collect.
'So if the developer originally sold the unit to Buyer 1 for $1 million and Buyer 1 later sells to Buyer 2 in the subsale market for $1.2 million, the fresh SPA issued by the developer to Buyer 2 will still reflect the $1 million price; the profit (or loss) made by Buyer 1 from his subsale transaction is not relevant to the developer,' Ms Tang explained.
As a result, the original sale price of the unit gets reflected in the second caveat lodged by the purchaser in the latest subsale deal. In this instance, two caveats will be lodged by Buyer 2 for the same transaction - the first at $1.2 million followed by another a few months later at $1 million.
SISV's Realink database, by listing both caveats, gives the impression that the price of the unit has fallen about 17 per cent in the past three months.
Said Ms Tang: 'A caveat is a legal claim against a property. When the developer issues a fresh SPA to a buyer who picked up his unit in the subsale market, it establishes a relationship between the buyer and the developer - that's a caveatable interest.'
SISV Services is in the midst of rectifying the problem, which has been caused by the service provider not eliminating 'duplicate caveats' lodged for subsale transactions which show the original price at which the developer sold the unit a few years ago (and which is listed in the fresh Sale & Purchase Agreement issued by the developer to the latest subsale buyer).
An SISV Services spokesman attributes the problem in Realink to an increase in subsale cases involving projects originally sold on deferred payment schemes (DPS) as the original buyers who may have picked up their units from developers a few years ago are now feeling the pinch from the economic downturn and facing difficulty getting bank loans.
This has led to an increase in subsales being registered and duplicate caveats showing up, according to him.
To fix the problem, SISV Services has added a 'history' button, next to transactions with two or more caveats lodged, for the professional version of Realink. 'Users can view the caveats' history and if they see the latest price is identical to the initial transaction in the primary market say a couple of years ago, they can disregard the latest caveat as being a 'duplicate',' the spokesman said.
'For the free version of Realink available to the public, we are in the process of devising a computer programme to help us identify the duplicates, so we may remove them.
'We didn't remove the duplicate caveats earlier because we could not determine readily that they were 'duplicates' as we do not have the buyers' names in the raw caveats data that we buy from SLA (Singapore Land Authority).'
Savills Singapore compiled a list of over 60 subsale transactions covering projects like The Sail, Cosmopolitan, The Esta, Park Infinia at Wee Nam, The Sea View, The Azure, Watermark, The Calrose and Parc Emily where Realink's database showed latest caveats at significantly lower prices than caveats lodged for the same units just a few months earlier. Typically, the latest caveated price was also the original transacted price for the unit a few years ago.
Savills did individual searches for a few of these cases using Singapore Land Authority's Inlis system and, in each instance, found two caveats being lodged for the property by the same buyer, just a few months apart - and with the second caveat at a lower price than the first.
Raw caveats data that SISV Services purchases from SLA does not contain information on the buyers' or sellers' identities to protect privacy.SLA confirmed that it provides identical data to both SISV Services and the Urban Redevelopment Authority.
Interestingly, URA's Realis system does not list these 'duplicate caveats' that do not reflect the latest transacted prices.
When asked how it sifts out caveats lodged when developers issue a fresh SPA based on original sale price, a URA spokeswoman said: 'If a caveat is lodged against a developer, we will ascertain whether it is a new sale or a fresh agreement arising from a subsale.
'We do this by checking whether a caveat for the same unit has been lodged against the sub-seller, whether a previous caveat has been lodged for the unit when it was originally sold and also against our database on new sales compiled from monthly surveys of developers. If the caveat is lodged against a developer arising from a sub-sale, we will not show the record in Realis.'
On the duplicate caveats in SISV Services' Realink database, Savills Singapore director for investment sales and prestige homes Steven Ming said: 'Analysts who do not distil the information carefully can come to very wrong conclusions of the market, thus further aggravating the already weak market conditions.
'Had end-users, investors and property owners relied on such data without first seeking a professional opinion, they can easily be making a misinformed decision as a result.'
There may also be a minority of rogue agents who may use such erroneous low-priced caveats to their advantage in convincing less savvy owners to close on low offers given market conditions, he added.
Q4 Private Home Price Slide Is Worst In Decade
Source : The Business Times, January 3, 2009
Some consultants notice yawning bid-ask gaps leading to distressed transacted prices
IN its worst showing since Q4 1998, the official private home price index slid 5.7 per cent in Q4 last year over the preceding quarter. For full-year 2008, the index fell 4.3 per cent, reversing a 31.2 per cent jump in 2007.
Property consultants are predicting a further decline of 10-20 per cent this year in the benchmark index, with upmarket homes continuing to be the worst hit, as in 2008. This sector was the most overheated during the run-up in 2006 and 2007.
'The bid-ask gap is very high; any buyer that comes in now wants to make sure he's buying at very attractive prices to cushion against future risk. As a result, most transacted prices are quite distressed,' said DTZ executive director Ong Choon Fah.
BT understands buyers are looking at prices at least 20 per cent below Q3 2008 levels before they are willing to commit.
URA's non-landed private home price index for Core Central Region (CCR) fell 6.3 per cent quarter-on-quarter in Q4, or a full-year drop of 5.5 per cent. CCR includes the prime districts, financial district and Sentosa Cove. In the Rest of Central Region, the price drop was 5.5 per cent for Q4, and 4 per cent for the full year. Outside Central Region, a proxy for suburban mass-market locations, suffered the smallest declines, of 4.7 per cent in Q4 and 1.6 per cent for the whole year.
The declines in URA's indices were far smaller than the price drops estimated by property consultants. CB Richard Ellis said that last year, average prices of new luxury homes under construction fell 30 to 35 per cent for prime districts 9 and 10, while those in Marina Bay and Sentosa Cove eased 10-13 per cent.
URA's price indices are weighted according to the moving average mix of transactions for the preceding 12 quarters, and this tends to make changes in the indices more muted during sharp market swings.
For this year, JP Morgan analyst Chris Gee said: 'The critical factor that will affect private home prices in 2009 - probably more importantly than the economy and jobs market - will be banks' financing of property. Banks seem happy to lend to the right type of buyers, but they're more conservative on valuations and tighter on loan-to-value.'
As for developers, smaller players have already started to chop prices. 'Among bigger developers, some are restructuring their portfolios and re-evaluating their risk positions,' DTZ's Mrs Ong noted.
A seasoned developer pointed to a diversity of strategies among developers, according to their financial strength, profit margin for each project and their view of when the recovery will take place. 'Some will cut and sell; some will package things that effectively give more discounts; some will lease instead of selling; some will just sit it out and wait for better times.
'Projects will be slowed down or delayed, stretching out the supply coming into the market, which in itself is a regulating mechanism,' he said.
In the public housing segment, the Housing & Development Board's (HDB) resale flat price index still inched up 1.5 per cent quarter-on-quarter in Q4 to scale a new peak. But this was slower than the 4.2 per cent rise posted in Q3.
ERA Asia Pacific associate director Eugene Lim said: 'We've been seeing more transactions with decreasing cash-over-valuations (COVs). The days of transactions with above $50,000 COVs are over.'
He is predicting a sub-1 per cent rise in the HDB resale flat price index for each of Q1 and Q2 this year. 'If the recovery takes longer, we may see the price index flatten in H2 2009 before decreasing, if the situation worsens.'
Knight Frank director Nicholas Mak predicted a 5 to 10 per cent correction in HDB resale flat prices this year, as the weakening economic conditions filter into the HDB market.
ERA's Mr Lim noted that 'in uncertain times, home buyers go for the 'safer' option of HDB flats to ease their financial burden'. He estimated 30,000 to 31,000 HDB resale transactions were done in 2008 - surpassing the 29,436 in 2007.
As for the private housing sector, CBRE predicted developers may sell 5,000-6,000 units in 2009, as falling prices boost take-up. It put the figure for last year at 4,300 to 4,400 units - just 30 per cent of 2007's record volume. Sales also slowed in the secondary market. CBRE estimated about 7,400 to 7,600 resale deals were done last year - against nearly 21,000 transactions in 2007. The 1,600 to 1,650 subsale deals it estimated for 2008 were also a far cry from the 2007's figure of 4,863.
Some consultants notice yawning bid-ask gaps leading to distressed transacted prices
IN its worst showing since Q4 1998, the official private home price index slid 5.7 per cent in Q4 last year over the preceding quarter. For full-year 2008, the index fell 4.3 per cent, reversing a 31.2 per cent jump in 2007.
Property consultants are predicting a further decline of 10-20 per cent this year in the benchmark index, with upmarket homes continuing to be the worst hit, as in 2008. This sector was the most overheated during the run-up in 2006 and 2007.'The bid-ask gap is very high; any buyer that comes in now wants to make sure he's buying at very attractive prices to cushion against future risk. As a result, most transacted prices are quite distressed,' said DTZ executive director Ong Choon Fah.
BT understands buyers are looking at prices at least 20 per cent below Q3 2008 levels before they are willing to commit.
URA's non-landed private home price index for Core Central Region (CCR) fell 6.3 per cent quarter-on-quarter in Q4, or a full-year drop of 5.5 per cent. CCR includes the prime districts, financial district and Sentosa Cove. In the Rest of Central Region, the price drop was 5.5 per cent for Q4, and 4 per cent for the full year. Outside Central Region, a proxy for suburban mass-market locations, suffered the smallest declines, of 4.7 per cent in Q4 and 1.6 per cent for the whole year.
The declines in URA's indices were far smaller than the price drops estimated by property consultants. CB Richard Ellis said that last year, average prices of new luxury homes under construction fell 30 to 35 per cent for prime districts 9 and 10, while those in Marina Bay and Sentosa Cove eased 10-13 per cent.
URA's price indices are weighted according to the moving average mix of transactions for the preceding 12 quarters, and this tends to make changes in the indices more muted during sharp market swings.
For this year, JP Morgan analyst Chris Gee said: 'The critical factor that will affect private home prices in 2009 - probably more importantly than the economy and jobs market - will be banks' financing of property. Banks seem happy to lend to the right type of buyers, but they're more conservative on valuations and tighter on loan-to-value.'
As for developers, smaller players have already started to chop prices. 'Among bigger developers, some are restructuring their portfolios and re-evaluating their risk positions,' DTZ's Mrs Ong noted.
A seasoned developer pointed to a diversity of strategies among developers, according to their financial strength, profit margin for each project and their view of when the recovery will take place. 'Some will cut and sell; some will package things that effectively give more discounts; some will lease instead of selling; some will just sit it out and wait for better times.
'Projects will be slowed down or delayed, stretching out the supply coming into the market, which in itself is a regulating mechanism,' he said.
In the public housing segment, the Housing & Development Board's (HDB) resale flat price index still inched up 1.5 per cent quarter-on-quarter in Q4 to scale a new peak. But this was slower than the 4.2 per cent rise posted in Q3.
ERA Asia Pacific associate director Eugene Lim said: 'We've been seeing more transactions with decreasing cash-over-valuations (COVs). The days of transactions with above $50,000 COVs are over.'
He is predicting a sub-1 per cent rise in the HDB resale flat price index for each of Q1 and Q2 this year. 'If the recovery takes longer, we may see the price index flatten in H2 2009 before decreasing, if the situation worsens.'
Knight Frank director Nicholas Mak predicted a 5 to 10 per cent correction in HDB resale flat prices this year, as the weakening economic conditions filter into the HDB market.
ERA's Mr Lim noted that 'in uncertain times, home buyers go for the 'safer' option of HDB flats to ease their financial burden'. He estimated 30,000 to 31,000 HDB resale transactions were done in 2008 - surpassing the 29,436 in 2007.
As for the private housing sector, CBRE predicted developers may sell 5,000-6,000 units in 2009, as falling prices boost take-up. It put the figure for last year at 4,300 to 4,400 units - just 30 per cent of 2007's record volume. Sales also slowed in the secondary market. CBRE estimated about 7,400 to 7,600 resale deals were done last year - against nearly 21,000 transactions in 2007. The 1,600 to 1,650 subsale deals it estimated for 2008 were also a far cry from the 2007's figure of 4,863.
Angry Buyers Clash With Developer Wing Tai Over Alleged Defects
Source : TODAY, Friday, January 2, 2009
AN UGLY spat — that has already resulted in a police report lodged against a homeowner — is brewing between listed property giant Wing Tai and some foreign investors of its three-year-old luxury condo near Orchard Road.
The development, which briefly set a record price of more than $2,000 per square foot when it was launched, has more than 130 units in all.
At least 15 unit owners — most of them foreigners who were buying their first Singapore properties — have come forward with a series of complaints claiming that poor workmanship has led to problems including cracked parquet flooring, chipped marble tiles, watermarks on walls and shattered glass panels on the balconies.
Some of these owners spoke to Today on condition of anonymity. They said they did not even want their condo to be named, for fear that it would drive down resale values.
The complainants said that the average cost of a two-bedroom unit had been more than $2 million; one investor had bought six such units for a total of $15 million, and one couple paid $7 million for a single four-bedroom apartment.
The latest incident on Monday morning — which happened as contractors were called in to rectify problems after similar incidents — saw a glass panel fall more than nine storeys from an unoccupied unit on to the swimming pool area. The impact shattered the panel and flung broken glass shards into the pool and as far as 20 metres away. No one was hurt.
According to residents, it is the fifth time a glass panel on a balcony had either shattered or fallen from a height.
When contacted, spokesman Clement Augustine from the property developer Winworth Investment — a subsidiary of Wing Tai Land — said the company takes a “serious view on safety on all our developments”.
Mr Augustine added that the glass panels used had met all industrial safety standards. In addition, each panel had been laminated with safety film to prevent them from shattering.
Winworth has lodged a police report over the latest incident, with Mr Augustine suggesting that the glass panel could have been tampered with.
Mr Augustine said that the owner of the affected unit had refused entry to Winworth’s representatives to investigate the latest incident. “From the pieces recovered (on the ground), we noticed that the safety film was broken. We cannot rule out the possibility that there may be wilful damage to the glass,” Mr Augustine said.
In response, the unit owner brushed off the fact that a police report has been lodged against him. He told TODAY that the condo’s management council - made up of some of the homeowners - that decided to ask an independent surveyor to assess the damage in his unit before the developer was allowed access.
The owner said he had told Winworth’s representatives they could enter his unit the next day. “It’s like when you have a car accident, you let the police do its investigation first, then you call the insurance before you go and repair the car,” he said.
The face-off was a development in a saga - already involving a lengthy exchange of emails and letters - simmering in the quiet and exclusive neighbourhood.
Disputing Winworth’s assertion that the defects were due to “wear and tear”, a handful of frustrated homeowners claimed they had spent thousands of dollars out of their own pocket on interior repair works.
One resident described the situation as “frustrating and insulting”. She said: “Most of the people living here are CEOs or managing directors. They can easily afford the repairs. The issue is having to take time off from running their companies to stay at home and supervise the repair and enhancement works.”
Conceding that some unit owners may not have inspected the apartments thoroughly before buying, she added: “When you pay that sort of money, you would assume the unit would be of the highest quality or at least a minimum standard. You don’t go into a Gucci or Hermes shop and check on every stitch in the bag that you have just bought.”
Mr Augustine said that the development had been granted its TOP (temporary occupation permit) in mid-2005. He denied that there had been shoddy workmanship and said that in any case defects which had been highlighted within the one-year liability period “have long since been addressed”.
Homeowners should channel their current grouses to the condo’s management corporation, which is responsible for its maintenance, he said.
The condo is now managed by Knight Frank Estate Management, which residents say took over at the beginning of last month from PSF.
Mr Augustine insisted that the units had been handed over their buyers only after each buyer had been given the opportunity of inspecting their homes and declaring themselves satisfied with the quality.
Even so, the developer had provided complimentary repair service for “genuine” complaints, Mr Augustine said.
He said: “There remain isolated incidences where a few owners may not have carried out diligent maintenance works, or have suffered willful damage to property, or whose property is the subject of wear-and-tear. Obviously, we are unable to address these matters because these owners should be responsible for their own repairs.”
AN UGLY spat — that has already resulted in a police report lodged against a homeowner — is brewing between listed property giant Wing Tai and some foreign investors of its three-year-old luxury condo near Orchard Road.
The development, which briefly set a record price of more than $2,000 per square foot when it was launched, has more than 130 units in all.
At least 15 unit owners — most of them foreigners who were buying their first Singapore properties — have come forward with a series of complaints claiming that poor workmanship has led to problems including cracked parquet flooring, chipped marble tiles, watermarks on walls and shattered glass panels on the balconies.
Some of these owners spoke to Today on condition of anonymity. They said they did not even want their condo to be named, for fear that it would drive down resale values.
The complainants said that the average cost of a two-bedroom unit had been more than $2 million; one investor had bought six such units for a total of $15 million, and one couple paid $7 million for a single four-bedroom apartment.
The latest incident on Monday morning — which happened as contractors were called in to rectify problems after similar incidents — saw a glass panel fall more than nine storeys from an unoccupied unit on to the swimming pool area. The impact shattered the panel and flung broken glass shards into the pool and as far as 20 metres away. No one was hurt.
According to residents, it is the fifth time a glass panel on a balcony had either shattered or fallen from a height.
When contacted, spokesman Clement Augustine from the property developer Winworth Investment — a subsidiary of Wing Tai Land — said the company takes a “serious view on safety on all our developments”.
Mr Augustine added that the glass panels used had met all industrial safety standards. In addition, each panel had been laminated with safety film to prevent them from shattering.
Winworth has lodged a police report over the latest incident, with Mr Augustine suggesting that the glass panel could have been tampered with.
Mr Augustine said that the owner of the affected unit had refused entry to Winworth’s representatives to investigate the latest incident. “From the pieces recovered (on the ground), we noticed that the safety film was broken. We cannot rule out the possibility that there may be wilful damage to the glass,” Mr Augustine said.
In response, the unit owner brushed off the fact that a police report has been lodged against him. He told TODAY that the condo’s management council - made up of some of the homeowners - that decided to ask an independent surveyor to assess the damage in his unit before the developer was allowed access.
The owner said he had told Winworth’s representatives they could enter his unit the next day. “It’s like when you have a car accident, you let the police do its investigation first, then you call the insurance before you go and repair the car,” he said.
The face-off was a development in a saga - already involving a lengthy exchange of emails and letters - simmering in the quiet and exclusive neighbourhood.
Disputing Winworth’s assertion that the defects were due to “wear and tear”, a handful of frustrated homeowners claimed they had spent thousands of dollars out of their own pocket on interior repair works.
One resident described the situation as “frustrating and insulting”. She said: “Most of the people living here are CEOs or managing directors. They can easily afford the repairs. The issue is having to take time off from running their companies to stay at home and supervise the repair and enhancement works.”
Conceding that some unit owners may not have inspected the apartments thoroughly before buying, she added: “When you pay that sort of money, you would assume the unit would be of the highest quality or at least a minimum standard. You don’t go into a Gucci or Hermes shop and check on every stitch in the bag that you have just bought.”
Mr Augustine said that the development had been granted its TOP (temporary occupation permit) in mid-2005. He denied that there had been shoddy workmanship and said that in any case defects which had been highlighted within the one-year liability period “have long since been addressed”.
Homeowners should channel their current grouses to the condo’s management corporation, which is responsible for its maintenance, he said.
The condo is now managed by Knight Frank Estate Management, which residents say took over at the beginning of last month from PSF.
Mr Augustine insisted that the units had been handed over their buyers only after each buyer had been given the opportunity of inspecting their homes and declaring themselves satisfied with the quality.
Even so, the developer had provided complimentary repair service for “genuine” complaints, Mr Augustine said.
He said: “There remain isolated incidences where a few owners may not have carried out diligent maintenance works, or have suffered willful damage to property, or whose property is the subject of wear-and-tear. Obviously, we are unable to address these matters because these owners should be responsible for their own repairs.”
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