THE cash premium paid by buyers chasing Housing Board (HDB) resale flats has risen islandwide in the second quarter, with many flat types attracting payments of between $30,000 and $40,000 above the market valuation.

An increasingly buoyant market sent the premiums – called cash-over-valuation (COV) – soaring across numerous towns.

The median outlay is now estimated to be well above the record $25,000 median in the first quarter, according to transaction figures from four property agencies.

The Straits Times has compiled median COV figures by flat type and estate based on the agencies’ second-quarter sales to get a snapshot of the market ahead of the official statistics out next week. These agencies – PropNex, ERA Realty, HSR Property and ECG Property – make up almost the entire HDB resale market share.

The median COV is a mid-point: Half the units were sold for a COV above that value, and half below. The figures show that median COVs of three-, four-, five-room and executive flats in many estates are now $30,000 to $40,000.

They were mostly below $30,000 in the first quarter.

Agency bosses predict that the official median COV will be above $30,000 for the second quarter – setting a record in the process.

An HDB spokesman told The Straits Times yesterday that ‘preliminary data indicates that the median COV is lower than $35,000′.

It noted that as COV is the result of negotiations between willing buyers and sellers, ‘in any market at any given time, there will be high COVs, low and even no COVs’.

Analysts said that high demand amid tight supply is driving up the cash premiums. Others attributed rising COVs to the ’sell high, buy high’ phenomenon gripping the resale market.

This means that upgraders and downgraders are selling their flats at high prices and asking for high COVs because they face the same demands when they go into the market to buy.

‘This is a case of the cat chasing its tail and prices are spiralling upwards due to this situation,’ said ERA Asia Pacific associate director Eugene Lim.

PropNex chief executive Mohamed Ismail noted that there is now ‘a lot of lateral movement in the market from upgraders and downgraders’, with first-time home buyers mainly left out of the action.

‘These buyers are queueing for flats directly from HDB, which are more affordable. The resale market is also propped up by PRs who cannot buy new flats, but need a home urgently,’ he added.

Agency data shows that executive flats in estates such as Bishan and Toa Payoh are selling at a median COV of $55,000 to $65,000 respectively.

The Bishan figure is striking as it was only $40,000 in the official first quarter figures. The Toa Payoh median COV then was $63,500.

Median COV levels for four-roomers in the second quarter ranged from $20,000 in Woodlands to $42,000 in Queenstown according to agency data.

The official HDB figures for the first quarter had the range at $21,000, also in Woodlands, to $36,500 in Bukit Timah.

Agency numbers showed Bishan, Toa Payoh, Queenstown and Marine Parade are the red-hot estates, while there are still bargains to be found in Sembawang, Choa Chu Kang, Pasir Ris and Jurong West. The median COVs in these areas have generally stayed around $20,000.

The HDB reiterated yesterday that it is ramping up supply of new flats from 9,000 last year to 16,000 this year to help relieve pressure on the resale market and stabilise it.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said the effects of the fresh supply will be felt in the medium term, and that prices and COV levels might inch up further before stabilising.

While first-time buyers might feel the pinch of rising COV levels, some home owners are cheering.

HSR property agent James Choo, 47, said he recently sold a five-room Tampines flat for a couple in their 40s for $480,000 – $80,000 above valuation.

‘The sellers were very happy as they could downgrade to a three-room flat with the proceeds and buy it without any loans,’ he said.

Still, analysts say there will be a resistance level where buyers will stop buying if COVs get too high.

‘This could be above the $35,000 median COV level,’ added Mr Mak.

Source: Straits Times, 16 Jul 2010

SALES of new private homes slowed further last month as World Cup fever seemed to take its toll on buyer interest.

Homehunters bought 847 units in June, compared with 1,083 units in May and the near-record 2,208 units in April, according to Urban Redevelopment Authority (URA) data released yesterday.

The June figure brings new home sales to 8,518 units for the first half of the year – averaging 1,420 units per month and ahead of last year’s average monthly sales volume of 1,224 units, noted CBRE Research.

The URA figures show that launches were also down last month, with 1,010 units released, against 1,135 in May.

Property experts had factored in a quiet June, given that the four-week-long South Africa World Cup, school holidays and the euro zone crisis were likely to divert the attention of potential buyers.

About half of the sales in June were for homes in suburban areas, according to URA, while prime areas proved to be the quietest, accounting for 17 per cent of sales.

Colliers International sees the geographical breakdown of new sales volumes showing intensified price resistance in June.

It points out that mid-tier units in city-fringe areas – or what the URA calls Rest of Central Region – dipped by a sharp 74 per cent to just 275 units from April’s peak level of 1,044 units.

The firm’s director of research and advisory, Ms Tay Huey Ying, said that this was not surprising, considering URA preliminary data had showed prices in that region gaining the most in the first half, compared to prices in the city centre or suburban areas. And overall, the prices have crossed the previous peaks.

The Minton in Hougang proved to be June’s top seller, moving another 173 units at a median price of $871 per sq ft. CBRE Research said that this was higher than the median price of $849 psf reported for the first 204 units sold in May.

A new launch, Waterfront Gold, had a weaker showing with 157 units launched and 77 units sold at a median price of $996 psf.

Jones Lang LaSalle said the total quantum demanded at the project – more than $1 million for a three-bedder – was possibly larger than what the market was willing to absorb.

At the 84-unit La Brisa in Geylang, where most of the units range from 409 sq ft to 689 sq ft, buyers snapped up 82 units at a median price of $960 psf.

Looking ahead, experts expect to see stronger sales in July, noting that already two new launches – 368 Thomson and Terrene in Bukit Timah – have done well.

Yesterday, NOL Group reported selling more than 100 units at Terrene since a private preview started on July 8.

Buyers could come out to buy before the inauspicious Hungry Ghost Festival in August, they said.

Still, CBRE Research predicts buying interest will remain selective, and depend on location, product attributes and price points.

Jones Lang LaSalle said a more moderate buying mood backed by conservative global economic conditions, and hence a continual slowdown in price growth, can be expected.

Source: Straits Times, 16 Jul 2010

Volumes fell during school hols, World Cup; July spurt expected before Hungry Ghost Month starts

(SINGAPORE) Students were not the only ones taking a break during the mid-year school holidays. Home seekers also slowed their pace, buying just 847 private homes from developers in June.

This is the smallest number of new sales in a month since the start of the year. It is 22 per cent lower than the 1,083 units sold in May, and 62 per cent below April’s 2,208 units.

But market watchers are hardly fretting as they expect purchases to pick up slightly in July before the Hungry Ghost Festival is celebrated.

Also, overall sales for the first half of the year have been strong. Developers offloaded 8,584 units from January to June – an average of 1,431 monthly. They did better compared with the same period last year, when they sold 7,374 units in total or an average of 1,229 monthly.

‘The momentum of new home sales slowed down in June as expected,’ said CBRE Research executive director Li Hiaw Ho.

Purchases had started falling in May as the euro debt crisis and high prices caused interested buyers to think twice.

According to flash estimates from the Urban Redevelopment Authority (URA) two weeks ago, the private residential property prices index hit a new high in Q2, past the pre-Asian financial crisis peak.

Then there were other distractions – the football World Cup and the school holidays – which could have persuaded developers to hold back launches. They rolled out 1,010 homes in June, down 11 per cent from 1,135 in May.

Buying activity was concentrated in the suburbs, reflecting market caution. Home hunters bought 429 homes in the outside central region, accounting for 51 per cent of total sales. These included 77 units from Waterfront Gold at Bedok, which made its debut in June.

In the rest of central region, developers sold 275 units or 32 per cent of the total. Activity was quietest in the core central region with 143 units or 17 per cent sold.

New launches included Far East Organization’s Skyline @ Orchard Boulevard, where two units changed hands for a median price of $3,839 per square foot (psf).

Property consultants believe developers may sell slightly more homes this month, with the World Cup and school holidays over.

Also, the Hungry Ghost Festival arrives in the second week of August. There might be ’superstitious buyers looking to pick up homes in July ahead of the inauspicious home-buying period’, said Colliers International research and advisory director Tay Huey Ying.

DTZ executive director (consulting) Ong Choon Fah added that strong economic growth in Q2 could boost market sentiment. On Wednesday, the government revised its GDP growth forecast for the year to a range of 13-15 per cent, up from 7-9 per cent.

CBRE’s Mr Li noted that sales in the third quarter have ’started well’.

At UOL Group’s Terrene in Bukit Timah, more than 100 homes out of 130 soft-launched since July 8 have been sold. The average price is $1,250 psf and demand came mainly from Singaporeans, especially those with private home addresses. UOL will officially release 42 units for sale today.

While the market could get better in July, few consultants expect buying activity in the coming months to revisit highs reached earlier in the year.

‘Buying interest will remain selective, depending on the location and product attributes as well as price points of new launches,’ CBRE’s Mr Li said.

Price resistance could keep some buyers on the sidelines. ‘Bargain hunting is likely to be the main focus of buyers,’ said Chua Yang Liang, South-east Asia and Singapore research head at Jones Lang LaSalle.

To some extent, home sales are driven by the number of property launches, said DTZ’s Mrs Ong. She expects launches in the mass market to continue because developers who recently won tenders for state land may want to roll out their projects before more government sites and more competition come onstream.

But developers of prime freehold projects could hold back launches because there have been fewer collective sales of such sites. They may consider waiting ‘for a little while more when they have a bit more pricing power’, Mrs Ong said.

Source: Business Times, 16 Jul 2010

Property giant City Developments (CDL) has officially launched 368 Thomson today. The freehold residential development is located in the prime District 11 residential enclave and occupies the sites of the former Concorde Residences, Balestier Court and Bright Building.

It is a quick stroll to Novena MRT station and a stone’s throw away from the MacRitchie Reservoir. The development has a 36-storey tower with 157 apartment units. It also features Therma jet pools, children’s aqua treat areas, a gymnasium, a social lounge and a club house.

CDL said more than 85 per cent of the units have already been snapped up. It added that the price per square foot had increased marginally by 2 to 3 per cent since the previews last week. During the previews, the units were priced at an average of $1,350 per sq ft translating to a price tag which ranges from $918,000 for the one+study apartments to $4.4 million for the five-bedroom penthouses.

CDL said that the majority of buyers are Singaporeans with Permanent Residents and foreigners making up about 25 per cent of the buyers. CDL’s group general manager, Mr Chia Ngiang Hong, said: “With its prime District 11 location, freehold status and attractive pricing, 368 Thomson represents an excellent investment opportunity and also good rental potential.”

Source: Today, 16 Jul 2010

World Cup, school holidays, lack of supply among reasons cited for drop

Private home sales continued to slow last month, falling to below the 1,000-unit mark for the first time this year.

Data from the Urban Redevelopment Authority (URA) showed that only 847 new units were sold last month – the lowest number of private home sales so far this year.

The figure is 22-per-cent lower than the 1,083 homes sold in May.

Yet, analysts seemed unperturbed by the softening trend, with some citing the World Cup fever and the month-long school holidays as among the reasons that contributed to the lower sales last month.

“Demand is starting to stabilise, reaching a more sustainable level,” said Mr Nicholas Mak, a real estate lecturer at Ngee Ann Polytechnic.

Still, some analysts believe that the latest figures may not suggest that demand for private homes have cooled down. Instead, they attributed the decline in sales to the lack of supply as reflected by the drop in the number of new units launched.

Last month saw a total of 1,010 units launched compared to 1,134 units launched in May and a hefty 2,084 units launched in April.

This may have resulted in buyers holding back their purchases as they wait for more options to become available through future launches, analysts said.

“I think the developers couldn’t launch enough of the mass-market segment as they have exhausted most of their earlier sites and cannot get new sites secured quickly enough for it to be launched for sale,” said Mr Colin Tan, head of research and consultancy at Chesterton Suntec International.

ERA Asia Pacific associate director Eugene Lim reckoned that the decline in the number of property launches was because developers had held back due to jitters arising from the euro zone crisis.

Meanwhile, about 51 per cent of the total units sold in June were located in the suburban areas with 429 units sold there, among which are The Minton and Waterfront Gold.

Homes located in the city and prime districts also did well, totalling 143 transactions for the month. However, home sales in the city fringes declined with only 275 units sold out of the 445 units launched there.

Ms Tay Huey Ying, director for Research and Advisory at Colliers International, said this may be because price points in the area had risen by about 18.3 per cent in the first half, based on URA flash estimates.

That is higher compared to the core central region which gained 9.7 per cent and outside central region which increased by 10.3 per cent.

While there was a drop in the sales of luxury homes, the price points for last month were higher than in May, said executive director of CBRE Research Li Hiaw Ho.

The number of units sold in the first half of the year totals 8,158, said CBRE.

Analysts said monthly sales in the coming months could average between 900 and 1,000 units and total home sales for the year could be in the range of 12,500 to 14,000 units.

There could still be a bright spot this month as market watchers expect better home sales as developers gear up for more launches ahead of the Hungry Ghost festival in August.

The Government’s upward revision of its gross domestic product growth forecast to between 13 and 15 per cent for the year may also help improve sentiment among home buyers, they said.

Source: Today, 16 Jul 2010

Property developer UOL Group has sold more than 100 units of its latest condominium project, Terrene at Bukit Timah.

This is almost 80 per cent of the 130 units released at a private preview which started on July 8.

UOL will be releasing the remaining 42 units for the official launch on Friday.

The 999-year leasehold condominium is a 50-50 joint venture between UOL and La Salle Asia Investment Management.

The apartments are priced at an average of S$1,250 per square foot for a typical unit.

They range from S$719,000 for a one-bedroom unit to S$2.79 million for a five-bedroom penthouse.

UOL said 23 of the 30 penthouse units have been sold.

Demand came mainly from Singaporean buyers, with majority from private homes in the nearby vicinity.

The five-storey development of 172 units, stretches across more than 130,000 square feet near the Bukit Timah Nature Reserve.

The development is expected to be ready by April 2014.

Source: Channel News Asia, 15 Jul 2010

Demand for new private residential properties continues to moderate.

The number of new homes sold fell in June to 847 units, according to figures from the Urban Redevelopment Authority.

That’s down from 1083 transactions done in May 2010.

The top sellers in June include projects like The Minton, La Brisa and Waterfront Gold.

URA says 143 new homes in the city and prime districts were sold during the month.

While the city fringe saw 275 units changing hands.

Homes in the suburban areas were most popular with 429 units sold.

All in, developers placed 1,010 units of new homes for sale in June.

Source: Channel News Asia, 15 Jul 2010

(SINGAPORE) UOL Group and City Developments Ltd (CDL) continued to sell units over the weekend at their new condos released last week.

UOL and LaSalle Investment Management sold a further 46 units over the weekend (as of 7 pm yesterday) at The Terrene at Bukit Timah, in addition to the 50 that they had sold as of 10 pm last Friday.

Thus far, 130 of the condo’s total 172 units have been put on the market. While the initial 85 units released by Friday were priced at about $1,250 per square foot on average, the further 45 apartments offered on Saturday and Sunday were at marginally higher prices. The five-storey, 999-year leasehold condo is in the Toh Tuck/Jalan Jurong Kechil vicinity.

‘We’re keeping the balance 42 units for our official launch later this week, which will be tied with the start of our ad campaign. What we’re most pleased about is that our penthouses and big units are still selling well. More than half of the 30 penthouses in the project have been taken up,’ UOL’s chief operating officer Liam Wee Sin told BT yesterday evening.

‘We’ve combined a bit of luxury with a rustic feel,’ he added. Prices of penthouses in the condo range from $1.7 million to $2.9 million.

Singaporeans form the majority of buyers, buying mainly for owner occupation, according to Peter Ow, managing director (residential services) at Knight Frank, one of the project’s two marketing agents.

‘Demand is still there; it’s only a matter of pricing. People who are walking out of the showflat without making a purchase are doing so because the price is beyond their budget,’ he added.

CDL sold another 32 units at its 368 Thomson up to 6 pm yesterday, taking total sales to 128 units. Last Friday, the group said, it had sold 96 of the 120 units released initially in the 157-unit freehold condo, which will be 36 storeys high.

Yesterday, a CDL spokeswoman said that the group released the remaining 37 units progressively over the weekend at a marginal price increase of 2-3 per cent from the initial average selling price of $1,350 per square foot.

‘The majority of the 32 units we sold over the weekend were one-plus-study units. We also sold three and four bedders,’ she added.

Singaporeans made up 75 per cent of the 128 units sold at the District 11 condo.

The next project CDL plans to release is likely to be a 642-unit, joint venture condo in Pasir Ris located next to the fully-sold Livia. ‘It is planned for release in phases in Q3 2010,’ she added.

Source: Business Times, 12 Jul 2010

Others say excessive liquidity exaggerates prices

PROPERTY prices of both private and Housing Board resale flats have, for the first time, surpassed previous peaks to reach new records.

Latest official estimates show private home prices rose 5.2 per cent in the second quarter, after a 5.6 per cent jump in the first quarter. That means prices are now 1.5 per cent above the 1996 highs.

HDB resale flat prices rose 3.8 per cent in the second quarter, marking the eighth straight quarter that prices have broken records since 2008, when they surpassed the peak levels of 1996.

The rise in prices signals a strong demand for homes in the property market. But with prices at record levels, can this demand be sustained?

For home-buyers and investors still on the lookout, the big question is: To buy or not to buy? Does it make sense to buy now, given that prices are at the highest levels?

Or is this a new era of property prices in Singapore?

Most industry analysts whom The Sunday Times spoke to seemed to think so.

The increase in levels of affluence in Singapore and in Asia due to a robust regional economy has helped to fuel prices, said C&H Realty managing director Albert Lu.

These prices move up and down in tandem with property cycles, but each peak is higher than the previous peak and each bottom is higher than the previous bottom, noted ERA Asia-Pacific associate director Eugene Lim.

‘So, if we were to plot a trend line across all the cycles, we can see that property prices will be on an uptrend over time,’ he said.

Given Singapore’s economy is roaring at double-digit growth rates, property prices can be expected to continue their march upwards in the short term, he added.

Even if private property buyers wait a year or two, there is no guarantee that prices will come down. And when they do, desirable properties are often taken off the market. ‘So if you see something you like, do your sums and if it is affordable for you, then go for it.’

Mr Lu agreed. Buyers who cannot wait might want to buy before prices go up further, although if the purchase can be put on hold, ‘it would be best to catch the next down cycle’, he said.

This means the absolute loan amount a buyer takes will be lower and more affordable.

But prices are unlikely to return to the 2004 levels and the next down cycle could be as far as five years away, he said.

Chesterton Suntec International research and consultancy director Colin Tan has a contrarian’s view.

This new level of prices is ‘somewhat exaggerated by the excessive liquidity in all the markets today’, he said.

While the market has achieved new peaks, it has done so on the back of ‘abnormally low interest rates’ – three times less than normal interest rates, he added.

The fundamental level of prices is likely much lower and close to pre-2007 price levels, he said.

‘So although we’re on a higher plane, current price levels will correct significantly to their true levels. The big question is when.’

So have investors missed the boat? ‘In a sense, they have. But it’s a boat lined with super glue – easy to jump into but difficult to disembark,’ cautioned Mr Tan.

The rental market has plateaued in the second quarter and from anecdotal evidence by agents, investors are finding it difficult to achieve the rental returns they had hoped for, he added. As a general rule, investors should aim for a 3 per cent to 4 per cent rental yield per year, said Mr Lim.

Despite the high price levels, Associate Professor Sing Tien Foo of the National University of Singapore’s real estate department observed that the current growth in prices is ‘still not as high compared with the growth in prices in the previous peaks in the 1990s’.

However, ‘we have to be concerned about the high volatility created by the active markets’ and cautious about the possibility of a property bubble, especially if prices continue to increase at a pace that is not sustainable or reflective of the health of the economy, he added.

Source: Straits Times, 11 Jul 2010

BUYERS have snapped up 96 of the 120 units launched at the 368 Thomson condominium since previews began on Thursday.

The District 11 development was priced at an average of $1,350 per sq ft (psf).

Sale prices ranged from $918,000 for a 689 sq ft one-plus-study flat to $4.4 million for the 3,391 sq ft five-bedroom penthouses.

The 36-storey tower, which will be built on the former Concorde Residences site in Thomson Road, will have 157 units. They comprise 31 one-plus-study flats, 62 two-bedroom units, 31 three-bedders, 31 four-bedroom units and two penthouses.

City Developments (CDL) said it will release more units to cater to demand.

The private preview – for former owners of Concorde Residences, Balestier Court and Bright Building, as well as CDL directors and staff – started on Thursday. The public were admitted yesterday.

Most of the buyers were Singaporeans, with permanent residents and foreigners – mainly from Malaysia, Indonesia, China and Hong Kong – making up 25 per cent, CDL said.

Its general manager, Mr Chia Ngiang Hong, said the strong demand for the project is testament to the popularity of the prime District 11 vicinity.

Buyers will also benefit from the growth cluster in the area, he said.

The developer launched Cube 8, a 36-storey condo comprising 177 units, in January in Thomson Road, on the site of the former The Albany and Thomson Mansion.

The Cube 8 project is next to CDL’s The Arte in Thomson, which it began selling in March last year at an average price of $880 psf.

The 368 Thomson estate is expected to be completed in 2015.

Terrene at Bukit Timah has also sold well. More than 50 out of the 85 units launched at the preview sale for developers UOL and La Salle’s business associates and staff were taken.

The average selling price for the 999-year leasehold condominium was $1,250 psf.

The project offers over 140 one- to four-bedroom apartments, and 30 three- to five-bedroom penthouses, all with rooftop jacuzzis.

Sizes vary from 506 sq ft for a one-bedder to 3,025 sq ft for a five-bedroom penthouse. The development is expected to be ready by April 2014.

Source: Straits Times, 10 Jul 2010