ST : More Singaporeans buying pricey homes

May 31, 2010

More Singaporeans buying pricey homes

Locals overtake PRs and foreigners as buyers of units costing above $5m

By Lee Zhi Xin

THINK most buyers of homes priced above $5million are foreigners? Not any more, according to a report by Savills Research and Consultancy.

It has reported a stunning reversal of a trend that has prevailed for at least three years, when foreigners had dominated the top end of the market here.

The proportion of Singaporeans buying these pricey homes shot up 12.8 percentage points to 42.3 per cent for homes sold in the four months ended April 30, compared with the figure in the fourth quarter of last year.

Locals have easily overtaken the 39.7per cent combined figure for permanent residents and foreigners. Their share is 21.4percentage points lower compared to that in the three months ended last December.

Companies made up the other buyers.

'This decrease could be partly due to more cautiousness as a result of the financial woes and uncertainties facing the European countries,' senior manager of Savills Research and Consultancy Christine Sun said. 'Another reason could be... that the Singapore currency is generally stronger against other currencies, making these houses more expensive for foreigners.

'On the other hand, Singaporean buyers are more upbeat, especially after seeing the boost in our gross domestic product (GDP) and the influx of tourists and investors.'

Indeed, this strong optimism was reflected in the surge in sales of non-landed, high-end private homes. An impressive 214 homes costing $5million or more were sold in the first four months of this year, surpassing the 208 for 2008.

This year's sales also amount to 70 per cent of the 307 homes sold in the whole of last year, bolstering Ms Sun's confidence that this year's sales total will better last year's as well.

Optimism in the high-end market started picking up in the third quarter of last year, when 147 homes worth at least $5million were sold - a 283per cent jump from the figure in the previous quarter. In the first quarter this year, 137 of these pricey units were sold.

But Ms Sun noted that these figures are still a far cry from 2007 figures, when 1,249 units priced at $5 million or above were sold as a result of the property boom.

In the primary market, Urban Suites sold the largest number of these high-end homes - 24 units - for the period from the third quarter of last year to this April.

Goodwood Residence and Nassim Park Residences were not far behind, with 18 and 16 units sold respectively.

In the resale market, Ardmore Park took the lead with 19 units sold, followed by Grange Residences with 15 units. The subsale market saw Tate Residences swiping first place with 17 units, while Ardmore II bit at its heels with 16 units sold.

As a result, the total transaction value of these non-landed private homes priced at $5 million and above has shot up 30 per cent in the first quarter to $953 million from the figure in the previous quarter.

This upswing looks set to continue with last month's figure of $507 million already more than half of last quarter's.

Leading the pack in price so far this year is a 6,889 sq ft unit at Nassim Park Residences, sold for an eye-popping $20million. This, however, is still some distance away from the record $33.4million for an 8,051 sq ft unit at Boulevard Vue sold in November last year.

These rising figures have translated into a larger share of the non-landed market for these homes, from 0.3 per cent in the first quarter of last year to 3.4 per cent last month.

As a result, the share of private homes priced at less than $2.5 million has dropped from 95 per cent to 87.4 per cent.

'All these findings may indicate that more buyers are increasing their risk appetite for pricier homes as the economy recovers,' said Ms Sun, who was quick to note that this may also be a result of private home prices rising in recent months.

Add another reason to the mix: Buyers are going for larger units as well.

Sales of non-landed private units above 2,000 sq ft saw a year-on-year leap of 426.7 per cent for the first quarter of this year to 553 units. These homes now make up 7.6 per cent of the non-landed private market, a 4 percentage point rise in the same period.

But Cushman & Wakefield managing director Donald Han thinks that demand for luxury homes will not continue rising at this rapid rate. 'Our rapid GDP rise is clouded by the European crisis, and the stock market does not look buoyant at the moment... I expect the property market to take a breather,' he said.

lzhixin@sph.com.sg