Property market cools as non-landed home prices post weak growth in 3Q11

It seems like the non-landed segment isn't doing so well as the average resale price of leasehold condominiums grew at a slower pace of 2.5%  in Q3 2011.

The pace of increase in resale prices of private residential properties in Singapore slowed down in Q3 2011, with stronger growth in the landed segment and in the non-prime areas, according to analysis by DTZ Research.

Average resale prices in the landed segment continued to outpace the non-landed segment, due to the limited stock of landed homes available. The average resale price of leasehold landed homes in the non-prime districts increased the most by 3.8% quarter-on-quarter in Q3 2011 while the average resale price of freehold landed homes in the prime districts of 9, 10 and 11 saw a price increase of 2.8% QOQ.

In the non-landed segment, the average resale price of leasehold condominiums in the suburban areas grew at a slower pace of 2.5% QOQ in Q3 2011 based on a basket of completed condominiums tracked by DTZ Research. The average resale price of luxury condominiums in the prime districts of 9, 10 and 11 were unchanged in Q3 2011, as the deteriorating global outlook and higher price quantum led to more cautious and selective buying.

Ms Margaret Thean, Executive Director, Residential, said: “Transactions in the high-end market have become more selective. Some projects still experience price increases. In a slower market, prices of the better designed and well-located projects will hold better.”

Despite the economic problems in the US and Europe and volatility in the stock market, purchase demand for private homes remained healthy. Primary home sales averaged 1,373 units per month in July and August, which is slightly above the monthly average of 1,358 units over the last four quarters from Q3 2010 to Q2 2011.

This is in spite of the Hungry Ghost month from 31 July to 28 August where there was no let-up in launches and take-up in August compared to June and July, which shows that the market is not superstitious in the face of strong buying sentiment. euHabitat, The Luxurie and Boathouse Residences were launched in the month of August, and accounted for close to 60% of all primary sales in August. The market continued to be active in September after the end of the Hungry Ghost month, as developers launched several projects, such as A Treasure Trove, and The Meyerise. Sales were brisk for these projects.

For instance, the take-up rate for A Treasure Trove in the first three weeks of the project’s launch was about 80%.

Secondary home sales2 averaged 1,278 units per month in July and August, which was 23.2% lower than the monthly average of 1,665 units sold in the secondary market from Q3 2010 to Q2 2011. As the lodging of caveats is voluntary and can be delayed, the number of units actually sold in the secondary market could be higher.

The demand in the market is mainly in the suburban area. Sales in the Core Central Region made up 6.8% of total primary sales and 21.6% of total secondary sales in July and August.

HDB owners are upgrading into the private home segment, aided by the rising HDB resale prices and low interest rates.

First-timers and investors are also motivated by the low Ms Chua Chor Hoon, Head of DTZ SEA Research, commented: “As many of these buyers are buying for owner-occupation and investment beyond four years due to the seller’s stamp duty measure, they probably take a longer-term view and are thus less worried about the current global economic uncertainties. However, if the global outlook worsens and theeconomy continues to slow down, this will eventually affect buying sentiment and lead to less exuberant purchase activity.”