Rise in unsold housing units on city fringe

THE property market’s woes have spread from the luxury sector to more modestly priced homes on the city fringe as new loan curbs keep buyers in check.

Unsold units are piling up in areas such as Bukit Merah, Kallang and Marine Parade, with developers forced to dangle big discounts to move homes.

However, bucking the trend, UOL Group’s 186-unit Seventy St Patrick‘s in Marine Parade sold about 100 units at an average $1,630 per sq ft at a private launch at the weekend, a spokesman said.

Homes in the area – dubbed the “rest of the central region” (RCR) in industry jargon – are right in the price range that leaves many buyers struggling to raise a mortgage, in the light of new rules that restrict lending.

“Developers of suburban condos have not needed to slash prices as most HDB upgraders find launch prices of about $1,000 per sq ft (psf) affordable. But developers of RCR non-landed homes have had to cut prices to fit the total debt servicing ratio (TDSR) limits of buyers,” said R’ST Research director Ong Kah Seng.

Wealthy buyers of properties in the central city area generally do not require a loan and so are not affected by the TDSR, he added.

The city fringe area had 414 completed but unsold units islandwide as at June 30. This was 29 per cent of the national total and up from the 20 per cent or 250 such units at the end of last year.

The central city area accounted for 63 per cent of such units as at June 30, down from 70 per cent at the end of last year.

Colliers International research director Chia Siew Chuin believes the build-up in completed but unsold units on the city fringe could be due to the recent completion of large-scale projects.

“It is also more challenging to find buyers for projects in the (area) where homes are generally pricier than mass market condominium developments, especially in the light of the current weak market sentiment,” said Ms Chia.

There were about 300 units left unsold in total at the 1,040-unit The Interlace in Depot Road and the 360-unit Concourse Skyline in Beach Road as at June 30. The Interlace obtained its temporary occupation permit (TOP) in the third quarter of last year, while Concourse Skyline received it in the first quarter of this year.

As at the end of last month, just six units had been sold at the 41-unit Riverside Melodies in St Michael’s Road, which received its TOP in the second quarter.

Project launches on the city fringe have had a mixed reception as well. About a week ago, the 500-unit Highline Residences in Tiong Bahru sold about 80 per cent of the first 160 units released.

But the picture at older launches is less rosy. The 56-unit Cosmo Loft in Balestier, launched in May last year, had sold just five units as at Aug 31.

The 128-unit Fulcrum in Fort Road, which started selling units in April 2012, has moved just 17 units with its last sale in May last year. #1 Suites in Geylang, on the market for over a year, had sold just 38 of 112 units as at the end of last month.

“The pool of buyers who can afford RCR properties has definitely shrunk. Unit sizing and price quantum are even more critical areas to consider today to achieve sustainable sales,” said Knight Frank Singapore research head Alice Tan.

She noted that while the cost of a 680 sq ft two-bedder home in this area tends to range from $1,600 to just over $1,800 psf, or $1 million to $1.3 million, “any price beyond $1.3 million would be a stretch for many people”.

Before the TDSR, some leasehold apartments had even been launched at nearly $2,000 psf, added Mr Ong. Alex Residences in Alexandra and Sky Vue in Bishan, which were both launched in the second half of last year, have sold at average prices of $1,640 psf and $1,576 psf respectively, “way below (the prices of units in) the nearby projects launched before them, before TDSR”, he said. As at the end of last month, Alex Residences had sold 214 of 429 units and Sky Vue 504 of 694.

Consultants noted that while sales momentum on the city fringe has slowed in line with overall market performance, developers have adjusted their expectations. The 99-year-leasehold Sky Habitat, for example, sold 120 units from April to last month. Prices have gone down from a median of $1,593 psf at the launch in April 2012 to $1,354 psf last month, said Ms Chia. It had sold just one unit at $1,530 psf from January to March.

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