A 0.1 per cent rise in resale prices of private condos in December, going by flash estimates of SRX Property, was dismissed by property consultants as a blip as demand appears muted this year.
The rise in resale prices from a month ago was driven mainly by transactions in suburban areas (Outside Central Region or OCR), which posted a price rebound of 0.5 per cent last month, after a sharp 2 per cent decline in November.
With the exception of this region, transactions in the city centre (Core Central Region or CCR) and city fringe (Rest of Central Region or RCR) registered price declines of 1.1 per cent and 1.2 per cent, respectively.
OrangeTee director of research and consultancy Christine Li pointed out that current cooling measures and the total debt servicing ratio (TDSR) have tilted the favour to the mass market segment due to their relatively lower quantum and support from upgraders’ demand.
R’ST Research director Ong Kah Seng cautioned, however, that the projected price changes for OCR resales are likely to be negative this year given that buyers, especially investors, are wary of the upcoming surge in completed suburban condos.
“Expatriates and professionals from Western countries are still preferring to rent city fringe apartments,” he said. “RCR homes are the most ‘investable’ compared to CCR and OCR (as it meets best of all worlds on budget, convenient locality, exclusive environment) for tenants-expatriates, so there are usually more pronounced leasing opportunities for investors in August-October periods.”
Compared to a year ago, the SRX non-landed private residential price index fell 4.2 per cent in December. Prices have fallen 6.1 per cent since the last peak in January 2014. An estimated 371 condo units were transacted in the resale market in December, unchanged from November and 13.1 per cent higher than in December 2013. Resales of suburban condos continued to dominate market volumes, with 165 or 44 per cent of all transactions occurring in the OCR.
The year-on-year rise in volumes may suggest that demand is recovering as prices become more affordable and the market has adjusted to TDSR, Ms Li said. “However, barring changes in housing policies, we see further downside for overall prices in view of the supply overhang and expected interest rate hike.”
According to SRX Property, condo units were changing hands last month at a negative S$10,000 below the computer-generated market value or the so-called X-value – suggesting further downward price pressure amid the dismal market sentiment.
Among districts with more than 10 resale transactions in December, district 25 (Kranji, Woodgrove) had the highest median transacted price in excess of X-value at S$25,000, followed by S$24,000 in district 15 (Katong, Joo Chiat, Amber Road). This suggests that buyers are more bullish in these areas.
In contrast, district 10 (Bukit Timah, Holland, Tanglin) had the median transacted price differing most negatively (S$80,000) from the X-value, followed by district 23 (Bukit Panjang, Choa Chu Kang) and district 5 (Pasir Panjang, Clementi). In other words, the majority of buyers in these districts purchased units below the computer-generated market value in December.
Mr Ong believes that even though resale prices are generally cheaper than developers’ sales, some potential buyers may be holding back for new units in the hope that developers will cut prices for new units soon.