Buyers tag private units as 'unaffordable'

Pricing remains the biggest driver of demand, said an analyst, with take-up rates higher for projects priced lower psf.

CIMB Analyst Donald Chua said, “We expect strong take-up for selected value-for-money mass-market projects, while uncertainty continues to weaken sales in pricier mass-market projects and the mid-market and luxury segments. Based on URA’s data, 3Q11 PPI growth had dropped to 1.3% qoq, from 2.0% in 2Q11. Growth continued to be driven by OCR, up 2.1% qoq, vs. 0.8% growth in CCR.”

Buyers within the S$10k-12k a month income segment, according to Chua, are said to be generally finding mass-market private units unaffordable.

Chua also noted the higher spreads on loans. “Banks had raised the spreads on their mortgage loans two weeks ago, by around 10bp. While the increase is not very much, larger loan installments will place greater pressure on buyers, where affordability is already a concern,” he said.

The analyst added low interest rates remain a key draw for buyers.

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