City&Country: Offshore-- Singapore private residential property to see drop in sales volume

Private residential property prices grew at a slower rate of 2.7% in 4Q2010 compared with the 2.9% gained in the preceding quarter, according to Singapore’s Urban Redevelopment Authority in its Jan 28 release of property statistics. Nevertheless, the private residential market ended 2010 at a record high — a 17.6% rise in prices for the year. Volume also hit a record last year with 16,292 units sold, compared with 14,811 in the previous peak in 2007.

In the October to December period, 4,241 units were taken up — 16.6% higher than the 3,638 sold in previous quarter. “Homebuyers were attracted to the projects launched in 4Q2010 owing to their strong location attributes,” says Li Hiaw Ho, executive director of CBRE Research. “Some are located near MRT stations while others are in locations earmarked for future development, such as a new transport network or additional amenities.”

Top-selling projects in 4Q include The Lakefront Residences (464 out of 620 units sold) near Lakeside MRT station in Jurong, Waterview (436 out of 696 units sold) in Tampines Avenue 1, Spottiswoode Residences (283 out of 351 units sold), and The Tennery (220 out of 338 units sold) at Woodlands Road and Choa Chu Kang Road.

The unexpected ferocity — as well as timing — of the fourth round of cooling measures announced on Jan 13 is unlikely to lead to a steep dive in prices, according to property consultants. “Prices are likely to remain unchanged in view of this standoff but sales volume could fall in the short term,” says Li.

New projects with perennially attractive attributes such as good location and access will still be well received, adds Li. “As the economy keeps on track with the government’s forecast of a 4% to 6% growth in 2011, it will help bring the return of market confidence in 2H2011.”

Developers’ sales this year, however, could drop to around 10,000 units from the record volume of 16,292 achieved last year, says Tay Huey Ying, director of research and advisory at Colliers International.

Steven Ming, executive director of investment at Savills and Prestige Homes, expects a 45% to 50% drop in volume in the current quarter. However, he also agrees that prices might not drop. “Developers are well capitalised. The current low interest environment and good rental market will also keep prices of the secondary market firm.”

High-end condominiums saw average prices increase 3.6% q-o-q from S$2,179 psf in 3Q2010 to S$2,258 psf in 4Q2010. Average super-luxury residential prices increased 5.4% q-o-q from S$3,210 psf in 3Q2010 to S$3,383 psf in 4Q2010. Compared with the price peaks in 4Q2007, the high-end and super-luxury private home prices are still 6.3% and 8.1% lower respectively. These price movements signal an upswing in high-end home prices that could be sustained over the next two quarters, barring unforeseen circumstances, says Ming.

Demand fundamentals remain healthy, thanks to high liquidity, low interest rates and easily available credit. Price growth for this year, however, will not be the same across the board. Tay expects mid-range and high-end properties to lead the way. In contrast, mass-market projects, which are what HDB upgraders aspire to, will either remain at the same level or dip 2%, she says.

Alex Chan is a writer with City & Country at The Edge Singapore

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 845, Feb 14-20, 2011