Increase due to limited stock: DTZ report

PRICES of resale homes are still on the rise but at a slower pace, with landed homes and homes in non- prime areas leading what growth there is, says a new private-sector property report.

The DTZ report found that the increase in the average resale prices of landed homes was due to their limited stock.

Prices of leasehold landed homes in non-prime districts rose the most, by 3.8 per cent in the third quarter of this year compared with the second quarter.

Demand for landed property has been steady over the past two years, said property experts.

‘Buyers of landed property enjoy the luxury of the space that such homes offer… Landed homes are also perceived as a good property asset to preserve their wealth,’ said Mr Nicholas Mak, head of research at SLP International.

Prices of freehold landed homes in the prime districts of 9, 10 and 11 rose 2.8 per cent.

Analysts said transcation volumes in the prime districts had slowed. This could explain why prices of landed homes in these areas are rising more slowly than those of their non-prime counterparts.

Condominiums in suburban areas registered a 2.5 per cent growth in resale prices in the third quarter.

Earlier this week, the Urban Redevelopment Authority issued flash estimates suggesting new private home prices had risen just 1.3 per cent in the third quarter, a drop from 2 per cent in the second.

DTZ said the demand is mostly for property in the suburban areas. This is due to two factors: public flat owners upgrading to private homes, and first-time buyers and investors taking advantage of low interest rates to buy property.

Ms Chua Chor Hoon, head of DTZ South-east Asia research, said: ‘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.’

She added that if the global outlook worsens and the economy continues to slow, it would eventually affect buying sentiment and lead to weaker sales.

The report also found that prices of luxury apartments in the prime districts were stagnant, a sign that the deteriorating global outlook and higher prices have led buyers to be selective and cautious about property purchases in this segment.

Ms Margaret Thean, DTZ’s executive director of residential, said: ‘Some projects still experience price increases. In a slower market, prices of the better-designed and well-located projects will hold better.’

DTZ noted that the activity in the secondary home sale market has dipped.

Transactions in the secondary market, which include both sub-sales and resales, averaged out at slightly more than 1,200 units a month in July and August.

That is 23 per cent lower than the monthly average of 1,665 units sold in the secondary market in the past 12 months.

But the report said lodging caveats is voluntary and can be delayed, so the actual number sold might have been higher.

Terraced houses in the Mount Elizabeth area. Prices of landed homes in the prime districts of 9, 10 and 11 rose, but sales slowed. — ST PHOTO: ALPHONSUS CHERN

Source: Straits Times, 7th Oct 2011