Tuesday, December 2, 2008

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Property market now shows classic signs of downturn

Analysis of Q3 caveats by DTZ points to new trends relating to subsales, foreign buying, HDB upgraders. Three classic signs of a Singapore property downturn have emerged in the third quarter:
  • Slide in subsales

  • Slide in Foreign buying

  • But bigger share of HDB upgraders in the private home buying market


Drop in Subsales Signals less interest from Specuvestors


Property consultancy DTZ's analysis of caveats for private home purchases shows that total subsales of non-landed private homes fell 8 per cent to 473 units in Q3 from the previous quarter. Subsales also accounted for a smaller 13 per cent share of purchases of non-landed private homes in Q3, compared with 16 per cent in Q2.

Subsales of high-end condos/apartments slowed down even more in Q3 2008. The number of subsale purchases involving units priced at least $1,000 psf fell 24.2 per cent quarter-on-quarter to only 213 transactions, accounting for 45 per cent of overall subsales of non-landed private homes in Q3, against 54 per cent in Q2 2008.

Falling Property Prices attract less foreign buyers


The number of foreign buyers (including permanent residents) of private homes (both landed and non-landed) slid 6 per cent quarter-on-quarter to 903 in Q3. Also, these buyers made up 22 per cent of total private home deals in the quarter, down from 25 per cent in Q2.

DTZ senior director (research) Chua Chor Hoon said: 'A large proportion of foreigners buy for investment. Hence when prices are falling, there is less interest. Furthermore, with economies and property markets slowing down all over the world, many of the foreigners have been affected back home and they may pull out their overseas investments.'

Competition from other Overses Properties


DTZ executive director Ong Choon Fah also points out that attractive property values are emerging in other cities which Singapore will be competing with. 'Foreign investors have lots more opportunities to consider where to invest,' she added.

HDB Dweller Increase Share of Private Property Buyers


HDB dwellers tend to make up a bigger proportion of private home buyers during a property downturn. 'Many of them are buying for owner occupation. Some may be sitting pretty on gains on their existing HDB flats which they bought directly from the HDB some years ago. Together with CPF savings, it may be easier for them to cross over to private homes,' notes Mrs Ong.

Buyers with HDB addresses picked up 1,718 private homes in Q3, up 34 per cent from the previous quarter.

Their share of caveats lodged for private home purchases rose to 41 per cent in Q3, from shares of 34 per cent in Q2 and 28 per cent in Q1 this year. HDB upgraders' 41 per cent share of private home purchases in the July-Sept quarter was the highest quarterly share in four years.

'The trend was supported by the narrowing gap between HDB resale flat prices and private home prices in Q3, as HDB resale prices continued to increase while private home prices fell,'

Ms Chua said the latest Q3 jump in private homes bought by HDB dwellers was mainly in the primary market. The number of units these HDB dwellers picked up from developers leapt 89 per cent from Q2.

Livia in Pasir Ris and Clover by the Park in Bishan were the two most popular projects among HDB buyers in Q3, with 192 units and 142 units respectively sold to HDB upgraders.

Analysts say HDB upgraders' share of total private home purchases may rise further. In Q2 2002, their share surged to 81 per cent and at the trough of the Asian Financial Crisis property slump in Q4 1998, the figure was 68 per cent.

Subsales refer to secondary market deals in projects that have yet to receive their Certificates of Statutory Completion. This may be anywhere from three to 12 months after the project gets its Temporary Occupation Permit (TOP).

DTZ said that for total subsale deals of non-landed private homes, the median price continued to fall in Q3, easing 11 per cent quarter-on-quarter to $941 psf - the lowest since Q3 2006, according to DTZ. 'In view of softening market demand, owners are more realistic in asking prices,' it said.

The Sail @ Marina Bay got the strongest subsale interest in Q3, with 30 deals (compared with 34 in Q2). The median subsale price for the project slid 6 per cent quarter-on-quarter to $1,719 psf, following a 14 per cent slide in Q2.

Median subsale prices also fell 3 per cent for Park Infinia at Wee Nam to $1,380 psf, The Esta (slipping 5 per cent to $910 psf) and City Square Residences (down 6 per cent to $960 psf).

Mrs Ong expects subsales to continue trending downwards although there will be spikes as major projects get their TOP. That's when there's usually more sales activity as the finished product can be viewed by potential buyers and the prospects of renting the units would increase the appeal of such homes to potential investors.

Soucre:BT,December 2, 2008

May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase

2 comments:

Anonymous said...

Dear Smart Buyer,

As a rule of thumb, within the context of Singapore, is the stigma towards a 99 LH the same and 999 LH?

Or is 999 LH generally viewed in the same way as a FH?

Anonymous said...

Yes, 999LH is generally viewed in the same way as FH.

good luck :)

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