The average holding period of subsales in Q1 2011 rose to its longest in at least three years, while the average increase from profitable subsale transactions in the quarter also hit its highest level since Q3 2008, according to a recent study of subsale activities by Savills Singapore.
Often used as a proxy of speculative activity, subsales refer to secondary-market transactions in projects that have yet to receive a Certificate of Statutory Completion.
The study also revealed that the average holding period for subsale deals in the first quarter was 2.31 years, longer than the 2.07 years to 2.23 years average holding period in various quarters of the previous year and the longest since Q1 2008’s 1.64 years.
In Q1 2011, about 97.4 percent of matched subsales were profitable. Of these, the average increase per profitable subsale transaction increased to S$315,043, exceeding the S$283,498 to S$289,004 for Q1 2010 to Q4 2010 and the highest number for any quarter since the third quarter of 2008.
“The bigger average gain from profitable subsale deals is in sync with the upbeat market sentiment, which has seen prices of non-landed private homes rebounding strongly from the trough in 2009 and even surpassing its previous peak in 2008,” said Steven Ming, Executive Director of Investment Sales at Savills Singapore.
“The longer holding period for subsales transacted in Q1 2011 indicates that short-term speculation was stifled by the government’s various cooling measures announced since February 2010, particularly the stringent seller’s stamp duty introduced on Jan 13, 2011.”
The most profitable subsale in Q1 fetched a profit of S$3.44 million, which involved a ground-floor unit at Nassim Park Residences, previously acquired for approximately S$12.1 million from the developer in June 2008 and sold for S$15.56 million in March 2011.
The largest subsale loss was for an apartment at The Orchard Residences at S$723,200.
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