Demand for new private homes during the first quarter of 2010 more than doubled compared to that in Q4 2009, according to a new report. Nearly 4,000 new units changed hands in the first three months of the year, compared to only 1,860 in the previous quarter.
According to CB Richard Ellis (CBRE), the overall prices of private homes increased by two percent to five percent in Q1 2010. Resale transactions supported mainly the price increase, as developers maintained the prices of new launches in the same locations at last quarter’s levels.
In fact, in some segments in the market, resale prices hit new highs in Q1. Based on research done by DTZ, resale prices of freehold homes in landed estates and leasehold apartments outside the prime districts (a proxy for mass market homes) saw new peaks in the first quarter of 2010.
Buyers continued to be out in force despite recent government measures, compressed yields and a vast number of new land sites released by the government during the quarter.
“Many investors are buying in anticipation of future rises in rents and prices as the economy is improving and the long-term fundamentals of Singapore are strong,” said Margaret Thean, residential executive director of DTZ.
The average resale prices for freehold landed homes in the prime districts of 9, 10 and 11 rose by 5.7 percent, hitting a new high of $1,529 psf in Q1, a 28.2 percent rebound from the bottom a year ago. Resale prices of properties in landed estates have now climbed for three straight quarters.
Prices of leasehold homes outside the prime districts (mass market homes) also hit a new peak. Prices of resale homes in non-landed estates rose 2.1 percent to $623 psf in Q1 2010, surpassing the $615 psf achieved in the last quarter of 2007.
However, DTZ said that the resale prices of luxury and prime freehold non-landed homes remain at about 10.7 percent and 1.9 percent below their previous peaks, respectively. Prices of prime homes increased just 3.7 percent to $1,456 psf in Q1, while luxury home prices climbed 4.2 percent to $2,500 psf.
The two segments still have room to gain, as market interest has shifted to luxury and prime freehold homes from the mass market.
“Most of the new launches in the first quarter were freehold projects located in prime districts 9, 10 and 11,” said Joseph Tan, residential executive director of CBRE. These included Holland Residences, Cube 8, Waterscape and The Laurels. Sales for upmarket projects in the central business district also saw strong demand. In Tanjong Pagar, the take-up at 76 Shenton Way and Altez was brisk due to their city locations and composition of small apartments.
There were also substantial changes in the buyer profile for new units in Q1. Based on caveats lodged to date, around 33.7 percent of the buyers in the first three months of 2010 were HDB addressees (who can be considered HDB upgraders), said CBRE. The proportion of HDB upgraders in Q1 2010 is lower than the 63.7 percent of HDB upgraders who purchased new homes in Q1 2009, after the lull in 2008.
“Most of the new launches then were mass-market type projects such as Caspian, Double Bay Residences and Mi Casa. In the first quarter of 2010, most of the projects launched were more upmarket and are located in the prime districts of Sentosa Cove and in the Downtown Core,” said Mr. Tan.
Foreigners accounted for about 23.5 percent of buyers of new homes in Q1 2010. Indonesians, Malaysians and PRC Chinese were the top three foreign buyers.
CBRE expects the take-up of new homes to fall to about 3,000 units in Q2 2010. Home prices are expected to increase at a gradual pace, held in check by the government measures.
Chua Chor Hoon, head of DTZ’s research unit in South-east Asia, said that the government will likely introduce further measures if the price increases and the buying frenzy continues or intensifies. She expects the prices of private homes to surge by five percent to 15 percent this year.