Rising prices have widened the gap in expectations between buyers and sellers, and slowed down demand in the third quarter, said some industry players including Mr. Douglas Wong, director for luxury homes at CB Richard Ellis (CBRE).
According to CBRE’s analysis of URA Realis caveats captured up to September 23, 16 Good Class Bungalow (GCB) transactions have been recorded in Q3 for a total of $253.4 million, down from 31 transactions for $516.2 million in Q1 and 36 deals at $777.7 million in Q2.
GCBs are exclusive housing form on Singapore governed by strict planning requirements and have a minimum land area of 1,400 sq m.
The final figure for Q3 may be higher since the quarter is not yet over and more caveats may be lodged in the following week.
In spite of a weaker volume in Q3, the 83 transactions closed year-to-date amount to a total sale value of $1.55 billion, only 10 percent below the $1.72-billion record for whole-2009 when 109 transactions were recorded. CBRE said the market is on course to reaching approximately 100 to 120 GCB deals amounting to $1.8 billion for whole-2010.
“Demand for GCBs has slowed in the third quarter primarily because the price expectations between owners and buyers have widened. On one hand, owners can afford to hold as they’re not in a hurry to sell; on the other, buyers can afford to purchase but are not prepared to pay what the owners are asking,” said Mr. Wong.
This trend was already observed even before the announcement of the recent cooling property measures and did not directly affect the GCB market, said Mr. Wong.
William Wong, managing director of RealStar Premier Property, agreed with this and said: “Reducing the maximum loan-to-valuation from 80 percent to 70 percent (for those already servicing existing mortgages) doesn’t affect buyers in this segment as most would borrow around 50-70 percent – if they borrow at all.”
The price gap is likely to result in fewer deals in the next few months. The relatively slow sales will likely continue in early 2011, when pent-up demand would have built up, said Mr. Wong. “That’s when we’re likely to see an increase in GCB transactions again.”