Instead of visiting a developer’s showflat, a high level of private home buyers turned to the resale market in Q4 last year. It was probably the result of fewer project launches in the fourth quarter, and the removal of the Interest Absorption Scheme (IAS) in September 2009.
The analysis for private housing transactions by Jones Lang LaSalle (JLL) shows that the number of caveats lodged dropped in all categories – primary market (developer sales), subsale and resale market – in the fourth quarter last year compared with the previous quarter.
In a percentage term, however, the decline was much bigger for the primary market at 68.8 percent, compared to 39.3 percent in resales and a 53.1 percent drop in subsales.
As a result, a private residential caveat lodged in Q4 was accounted for 62 percent in the resale market. On the other hand, property developers saw a 26 percent slide in their total private home sales in Q4 from 40 percent in Q3.
The share of total transactions for subsales remained at 11 percent. Resales and subsales are the market’s secondary transaction, with resales referring to development with Certificate of Statutory Completion (CSC) while subsales are projects that have yet to receive CSC.
According to JLL’s analysis of caveats captured in the URA Realis System, The Sail @ Marina Bay was the most popular project that turned into the resale market in Q4, with 51 caveats lodged at an average price of $1,901 psf. This was followed by Caribbean at Keppel Bay, with 49 transactions at $1,355 psf; the Serangoon Gardens Estate with 44 caveats at $592 psf average price; and Melville Park in Simei with 35 deals at $529 psf.
The top seller in the subsale market was Ferraria Park Condo in the Upper Changi area with 32 units sold at $734 psf. Several popular subsale projects in the fourth quarter included The Centris, Botannia in the West Coast area, One Amber and Casa Merah near Tanah Merah MRT Station
In terms of buying directly from developers, the top pick in the fourth quarter were Hundred Trees, The Interlace, Suites @ Guillemard, Cyan and Elliot at the East Coast.
“The proportion of resales have edged up at the expense of new sales. One reason for this shift is the government’s termination of the interest absorption scheme (IAS) and interest only loans (IOL) in September 2009, which had been offered for primary market sales,” said Chua Yang Liang, JLL’s Head of Research (SE Asia)
“Speculators who had been depending on this form of financial leveraging – they only needed to pay 10-20 percent of the purchase price upfront and could defer paying the rest of the price till the project’s completion – have effectively been removed from the market.”
The completion of 3,930 private home units in the third quarter of last year also contributed to the surge of Q4’s resale proportion. “A corresponding increase in resale transaction volume is to be expected as more buyers are motivated to put their money down for a completed asset,” said Dr. Chua
DTZ executive director (consulting), Ong Choon Fah agreed with JLL’s findings and said, “’Generally, you can pick up a home for relatively less in the resale market than in the primary market, and you can live in it or rent it out straight away.”