Keys To Finding The Best Property Deals In Town - By PropertyGuru

Singapore’s economy has been on the upswing this year, compared to its lacklustre showing in 2008, and whilst unemployment remains high, the property market achieved a mini boom for the first seven months of this year, with sales of new units increasing steadily and peaking in July 2009. The signs for that month were reminiscent of the property craze of 2007, which included large queues at condo showflats, blank cheques being handed to agents to secure units and flyers flooding the mailbox of every home.

Out of the 2,878 units launched in July 2009, a whopping 2,767 new units were sold. This smashed the record set in the previous month of June 2009 of 1,825 units by a robust 52%.

And it’s not just homes in the mass market that were being snapped up. In fact, the high-end districts were seeing a lot of activity. Over 40% of July’s transactions were for homes in the $1,000 to $1,999psf bracket, with the exclusive Volari at Balmoral Road transacting 79 units alone at a median price of $2,059.

Meanwhile, homes in the lower-range mass market were selling fast too, with the top three most transacted units all going at median prices of below $1,000psf. The Gale at Flora Road, Meadows @ Pierce and Waterfront Key at Bedok Reservoir Road sold 294, 286 and 191 units respectively. In fact, these projects were so popular that they accounted for over a quarter (28%) of the total transactions in July 2009. Over at Toa Payoh, NTUC Choice Homes managed to sell 410 of the total 460 units it released for the preview of its Trevista condo in August 2009.

So what were the reasons for the mini boom? Analysts believe that developers were just reacting to the pent up demand of homebuyers by releasing more units for sale and raising the prices accordingly, which are still below the 2007 peak. In addition, due to the booming stock market, Singaporeans were riding upon the general sentiment that “the worst was over”. Other reasons why the property market experienced such a good recovery included factors such as:

HDB Upgraders

Analysts have been pointing out that HDB owners have been taking advantage of the narrowing gap between rising HDB flats prices and fall in private home prices taking place up until early 2009. A spokesman for NTUC Choice Homes said that 70% of Trevista’s buyers had HDB addresses. Currently, a 5-room HDB flat in a mature estate like Ang Mo Kio or Toa Payoh fetches $500,000 to $600,000, while some two to three bedroom condo units in the heartlands are going for $600,000 to $700,000.

Consumer Wealth

The net worth of Singapore households fell only slightly from a peak in 2008 and this resilience in the household balance sheet is one likely reason for the mini property boom. In addition, the en-bloc sales boom in 2006/2007 gave approximately 13,000 home owners disposable cash (and in many cases up to 1-2 million dollars) to invest in new properties.

Low Interest Rates

The SIBOR rate has reached an incredibly low 0.68 percent for the past 8 months, which has helped drive demand for private homes. Banks have seen an increase in customers enquiring about home loans. For example, OCBC reported that its loan approvals have doubled in the second quarter compared to the first three months of 2009. It’s also good to know that this trend of cheap funding is expected to continue in 2010.

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