Rise in private home resale prices ‘not sign of recovery’

RESALE prices of private non-landed homes inched up last month after slumping in September, according to numbers out yesterday.

Flash estimates from the National University of Singapore’s residential price index showed that values increased 0.3 per cent in October over the previous month. That represents a turnaround from September when prices fell 0.7 per cent from August.

Prices of apartments in the central region increased 0.6 per cent over September while those in the non-central region edged up 0.1 per cent. Shoebox unit prices – apartments of up to 506 sq ft – rose 0.3 per cent.

The index compiled by the NUS Institute of Real Estate Studies tracks a basket of completed homes across the island.

Property consultants said the rosy numbers do not point to a possible recovery in the ailing real estate market as they were partly due to investors timing their purchases.

“Investors are willing to offer slightly higher prices than before, as they feel that a unit bought around September to November will mean that it will be ready for renting out in a couple of months, around early 2015, when the sale is fully completed,” said R’ST Research director Ong Kah Seng.

“There could be better chances of leasing it out as more expatriates tend to arrive in the early part of the following year.”

Mr Ong also noted that the price increase was “marginal”, pointing to cooling measures such as the Total Debt Servicing Ratio (TDSR) that continue to “limit buyers’ interest in resale homes”.

He expects resale prices to dip again next month amid the festive season and into early next year.

Mr Alan Cheong, senior director of research and consultancy at Savills, said October’s better figures could “belie stress points in the market”, such as the growing number of mortgagee sales.

“This could give (homebuyers and investors) a false sense of security,” he said.

In one sign of the increasing stress, 98 homes were put up for auction sale by mortgagees, or lenders, in the January to October period – well above the 14 recorded in the same period last year, according to Colliers International.

Mr Cheong also said transaction volumes could pick up slightly next year.

“It would be about 19 months since the TDSR was implemented, and those interested in real estate would have collected two rounds worth of bonuses in salary,” he noted.

“Transaction volumes have been languishing not because people cannot afford to buy property, but because they’re just put off by the negative talk surrounding the real estate market, and they’re just waiting for prices to fall further.”

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