ST : Resale home prices at new high

Mar 26, 2010

Resale home prices at new high

Jan-Feb prices surpass 2007 peak, says report

By Joyce Teo

RESALE prices for private homes have gone through the roof this year and are now above the sky-high levels seen in the 2007 boom.

A Savills Singapore report said average values in the segment in January and last month shot ahead of the dizzy heights set three years ago.

The soaring prices are part of a larger picture that depicts the entire real estate sector roaring along in top gear.

Rising prices in the HDB market - and high launch values for new homes - are helping to push buyers into private resale homes, say experts.

Savills research showed that average prices for non-landed private resale homes have surpassed the 2007 peak by 6 per cent while landed home prices are 15.6 per cent ahead.

Private resale home prices are also now above the 1996 peak. This means they are at the highest level ever seen, said Ms Christine Sun, the firm's senior manager for research and consultancy.

'HDB resale prices are on the rise and prices of new launches are quite high, so private resale homes have become a popular alternative for buyers,' said Ms Sun. Savills found that average resale prices of homes in the mass market, mid-tier and high-end segments have all crossed the 2007 peaks.

In the first two months this year, average mass market prices were at $662 per sq ft (psf), up 19 per cent from $555 psf in 2007. Average resale prices of mid-tier homes were $886 psf, up 19.7 per cent from $740 psf in 2007.

It was not as buoyant in the high-end segment where average prices reached $1,425 psf in January and last month, up 11.8 per cent from $1,275 psf in 2007.

But there have still been some gilt-edged deals in this segment this year. At The Sail @ Marina Bay, 15 units transacted for more than $2,000 psf to as high as $3,204 psf, said Ms Sun.

Private property proved unexpectedly resilient during the downturn. Prices of resale high-end homes suffered a marginal decline of 0.2 per cent from 2007, said Savills.

Prices for homes in the mid-tier segment rose 5.6 per cent while mass market ones increased 6.8 per cent.

Knight Frank chairman Tan Tiong Cheng said yesterday: 'Once there are no suitable new launches in a certain area and there's a huge gap between prices of new launches and old projects, people will chase after the old projects.'

While prices are up, sale numbers are still lagging those of the boom years. Resale volume has picked up in the past two months, but it has not surpassed the resales done in the first quarter of 2007, said Ms Sun.

Nonetheless, the Savills report showed that resale volume last year was strong, more than doubling those in 2008. But the 15,009 resale deals done last year are still below the 2007 peak level of 20,665 deals. Sales of new homes in comparison totalled 14,725 units last year and 14,811 units in 2007.

Consultancy Cushman & Wakefield managing director Donald Han told The Straits Times: 'The market is seeing activity at all levels. It remains active despite measures introduced by the Government. Given that new launches have been largely well received, it is natural to see resale prices rise in tandem.'

Owners of completed homes can also cash in on the popularity of new projects nearby that are selling at high prices, experts said. In the resale market, owners of homes near new launches that are selling at higher prices would have a better bargaining power when it comes to negotiating for higher prices.

But not every project has reached its peak price, experts cautioned. In the new launch market, mass market and mid-tier prices have exceeded the 2007 peak but luxury homes are still about 15 per cent to 20 per cent below that peak.

joyceteo@sph.com.sg