THEY were shut out of the property market during the most recent boom in 2007, when furious demand for luxury homes drove up home prices far beyond their reach.
Now, buyers of cheaper mass market homes – defined loosely as bigger HDB flats and condominiums in the suburbs – are back in the market with a vengeance.
They doubled their purchases of five-room and executive HDB flats between March and June, pushing overall HDB prices up 1.4 per cent to hit a new high in the quarter, according to Housing Board (HDB) data released yesterday.
Mass market buyers also picked up four out of every 10 private homes sold, a shopping spree that resulted in twice the number of homes being sold in the second quarter than the first quarter, said the Urban Redevelopment Authority (URA). The number of resales nearly trebled while sub-sales more than doubled.
The strong demand for cheaper condos meant that while private home prices still fell 4.7 per cent in the second quarter, it was a far smaller decline than the plunge of 14.1 per cent in the first quarter.
What helped jam the brakes on the decline were suburban homes, which saw the smallest price drop in the quarter – 2.3 per cent – compared to pricier prime and city-fringe properties, which saw prices fall by double that amount.
Rents for private homes continued to fall 5.2 per cent in the quarter, though 8 per cent more leases were signed.
Consultants had actually expected prices to increase in the second quarter, as home buyers flooded back and developers started to selectively raise prices.
‘Our own analysis showed that private home prices in the second quarter rose,’ said DTZ’s head of South-east Asia research Chua Chor Hoon. She said the price increases ranged from 3 per cent for some suburban resale homes, to 11 per cent for homes in the prime districts.
In response to queries, the URA said that while prices have risen in some projects, there were still other developments that saw prices fall in the quarter.
But private home prices are likely to show a definite pickup from the third quarter, consultants say. ‘The second quarter will possibly be the last quarter of price declines,’ said Ms Tay Huey Ying, director of research and advisory at property firm Colliers International.
‘If developers remain cautious and tread carefully with price increases, this momentum in the market could continue. But if developers are impatient and jack up prices too quickly, that may hurt demand as buyers are still price-sensitive.’
Mr Nicholas Mak, a long-time property consultant, said he expects overall prices to show an increase in the second half of this year. His reasons: the recovery in global stock markets, relief buying due to a shorter-than-expected recession, and low interest rates that make property purchases look more attractive.
The outlook has also been boosted by the fact that demand is no longer restricted to the mass market, he said. In recent months, more buyers have been keen on mid-tier and high-end condos such as The Arte at Thomson or One Devonshire in Somerset. Even at suburban condos, buyers seem to be opting for larger, more expensive units. Yesterday, developer UOL Group sold 180 units in a single day at Meadows@Peirce in Upper Thomson.
While the project offers smaller units from 517 sq ft in size, most units sold had at least three bedrooms and were priced at $1 million and above, said UOL’s chief operating officer Liam Wee Sin.
The improved economic outlook also meant that offices and shops also saw slower declines in prices and rentals in the second quarter. Office prices fell 3.9 per cent, while rents fell 7.7 per cent.
But these numbers are unlikely to turn positive soon as recent retrenchment exercises dampen the office sector, said Mr Li Hiaw Ho, executive director of CBRE Research. He was more upbeat about shopping malls, as there is still ‘healthy demand’ for existing shop space. Shop rents eased 2 per cent in the second quarter and prices fell just 1.4 per cent.
Source : Straits Times – 25 Jul 2009
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