Demand for mass market homes remain resilient

 MASS-MARKET homes remained the best-performing segment in October amid a decline in new home sales. The freshly released data from URA saw 1,948 new private homes (excluding ECs) being snapped up by homebuyers, which translates to 25.6% decrease M-on-M. Although there is drop in volume of new home transactions in October, the total number of new private homes that were transacted so far in 2012 to 20,171(excluding ECs) surpassing 2011’s volume already. As predicted, the most bullish action was seen in the mass-market segment in Outside Central Region (OCR) where 1,482 units or 76% of all units sold. October also saw 676 ECs being sold; or more than half of the 4 top-selling projects were ECs.

Chief Executive Officer of PropNex Realty, Mr Mohamed Ismail commented, “It is no doubt that we are seeing some slowing down of new home purchase partly due to the restrictions on home loan tenure. However, investing in property still remains an attractive option because of a lack of other viable investment alternatives, which enabled real estate to come across as quite a compelling proposition. This is true even if you take into consideration the other cooling measures such as the Additional Buyer Stamp Duty (ABSD) and the Seller's Stamp duty (SSD), but for now, buyers seem undeterred and willing to pay due to a few reasons”.

Continued Mr Mohd Ismail, “Firstly, land is scarce in Singapore although there will still be cycles. Secondly, potential homebuyers or investors believe that if they put their money in real estate, they're unlikely to lose a significant part of it. In addition, a property can have a myriad of uses - besides living in it, you could rent it out, use it as a weekend home, or even hand it down to your child when he/she grows up”.

“Also, other than our strong economy and low unemployment rate in Singapore, we believe that home buying sentiments could also have been boosted by the macro environment of rock bottom interest rates, which is predicted to persist for the time being—and this will sustain the buying momentum until the end of the year”

In October, home buying continued to be dominated by mass market homes in the OCR, where suburban condos are located. Heron Bay (EC) sold 354 units at $738psf. Other projects that sold well include Skies Miltonia with 309 units sold at a median price of $1,034 psf; Riversails sold 271 units at a median price of $848psf while Waterbay (EC) sold 221 units at a median price at $752psf.

"November’s transaction volume is forecasted to be between 1,700, to 1,900 as it is the school holidays and a quieter period while December will be muted, as developers tend to hold back their new launches during the festive seasons. However, Mr Ismail noted that new private home sales figures to come at between 22,000 to 24,000 units (excluding ECs) in the entire 2012”.

Amid rising private home transactions and prices, the government reiterated that it is ready to act, if and when necessary, to keep a good handle on the property market. The news may bring cheer to buyers concerned about the persistent uptick in prices. However, developers will have to price their new launches more sensibly and reasonably in order to keep moving unsold units in earlier projects due to the presence of price resistance,” concluded Mr Mohamed Ismail.

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Carolyn Goh
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P & N Holdings Pte Ltd (holding company of PropNex Realty)
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