Good time to buy luxury property: analysts

With luxury home prices in Singapore continuing to fall, now could be a good time for home buyers to make a big ticket purchase. Here’s what analysts have to say.

According to Alice Tan, Research Head at Knight Frank’s Singapore office, the prime segment of the property market has been significantly affected by the government’s slew of cooling measures.

“The 15 percent Additional Buyer’s Stamp Duty (on top of the 3 percent stamp duty) imposed on foreign home buyers – who form a significant proportion of the luxury home buyers’ market, has led to transactions falling by more than half, and therefore affected prices,” Tan said in a recent interview.

She was quoted saying in a media report that luxury properties located in the Core Central Region (CCR) have seen five consecutive quarters of price declines. And analysts expect prices in this segment to continue dipping in the fourth quarter.

A Colliers International report stated the average capital values of luxury and super-luxury apartments softened for the fourth consecutive quarter in H2 2014. Prices dipped 1.1 percent quarter-on-quarter in Q2 2014 to average $2,639 psf by the end of June 2014.

This may not be good news for property sellers and investors, but for buyers who have been planning to acquire a luxury property, there is now a window of opportunity to purchase a dream home.

Meanwhile, Barclays noted that sales in the CCR surged by 91 percent in July after developers cut prices by as much as 20 percent.

“In particular, The Vermont on Cairnhill managed to clear its remaining 37 units after cutting prices by some 12 percent from $2,400 psf to $2,113 psf. Hallmark Residences, off Bukit Timah Road, sold three units in July and sold 63 percent of its 75 units after bringing down selling prices by 14 to 20 percent from its initial launch price of $2,200 psf,” noted the report.

Aside from the drop in property prices, analysts say there will be more good pickings for long-term rental income, capital downside protection as well as capital gain potential within the CCR.

Sharing his thoughts on areas that property seekers should look at, Thomas Tan, Director of RE/MAX Singapore said, “There are an increasing number of unsold units among the new developer launches, which will continue to put a downward pressure on prices in Q4 2014 and early 2015. But that said, properties in the CCR still remain a good asset class for investors because of its location and prestige that comes with it (especially districts 9 and 10), so even when the market takes a downturn, it is still able to hold its ground.”

But buyers should still do their homework before putting cash down on a property.

“While the falling prices do present a great opportunity for new home buyers, as well as existing home buyers looking to upgrade, or even as a long-term investment, a property purchase is a large investment outlay and buyers should do their own due diligence first before entering the market,” noted Lee Lay Keng, Director and Regional Head (SEA) of Research, DTZ.

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