ST : Muted sales after new property rules kick in

Sep 13, 2010

Muted sales after new property rules kick in

Buyers waiting for prices to drop, but developers hold steady

By Esther Teo

IT IS fewer visitors and even fewer sales for property showflats across the island as buyers play a waiting game in the hope of seeing prices fall.

However, developers have yet to blink, with asking prices at most showflats holding steady, with one - NV Residences in Pasir Ris - even raising prices marginally at the weekend.

Two weeks after measures to cool the property market were introduced, NV Residences bucked the trend of muted sales with a strong showing of 90 units sold at the Hari Raya weekend.

This brings total sales to 250 out of 300 units released. Eighty per cent of buyers were Singaporeans; the rest were permanent residents and foreigners, a City Developments (CDL) spokesman said.

Prices were raised by between 1 per cent and 2 per cent at the weekend from its average selling price of $830 per sq feet (psf) when the condominium first previewed last Wednesday. The 642-unit condo is the first large residential project to be released after the Government introduced new property rules on Aug 30.

The new measures included tighter lending rules for home owners with existing mortgages looking to buy another property. They can now borrow up to only 70 per cent of the value, down from 80 per cent. Those who buy an HDB resale flat on or after Aug 30 must also dispose of their private property - including any held overseas - within six months of the HDB purchase.

When The Straits Times visited NV Residences on Saturday afternoon, more than 100 potential buyers crowded its showflat at Pasir Ris.

Madam Linda Tay, 55, who bought a two-bedroom apartment there, said she was unaffected by the new rules as the mortgage on the HDB flat she and her husband have been living in for the past 22 years was paid up.

'This is a long-term investment for us, we can rent it out or pass it on to our children...We think it is better than just leaving our money in the bank,' she said.

PropNex chief executive Mohamed Ismail said the project's good location and reasonable pricing were key to its strong sales. Other sites sold to developers this year are expected to be launched for up to $1,000 psf, given their break-even prices of about $800 psf, he said.

Another analyst said that NV Residences, as the newest launch on the market, would attract the most buyer interest.

At other showflats across the island, buyer traffic was down, with only a handful of visitors at any one time. It was a quiet Saturday afternoon for the showflats at Waterfront Gold at Bedok Reservoir Road, Centro Residences near Ang Mo Kio MRT and Flamingo Valley in Siglap.

Some agents said the number of walk-in buyers at showflats has dropped by up to 10 per cent since the cooling measures were introduced.

Far East Organization's Centro Residences did not record any sales at the weekend. Phase Two of 319-unit leasehold project The Greenwich at Seletar Hills saw nine homes sold, bringing total sales to 225 out of 265 units launched, at an average selling price of $1,074 psf.

Frasers Centrepoint Homes declined to give weekend sales figures for Flamingo Valley and Waterfront Gold.

DMG and Partners property consultant Brandon Lee said it was unlikely developers would lower prices immediately as the strong run up in property prices and sales over the past year have given them a strong holding power.

Mr Ong Kah Seng, Cushman & Wakefield Asia-Pacific research senior manager, said that for prices to fall, take-up must first moderate, reflecting the onset of a contraction in homebuying interest.

'Developers and home owners are reluctant to lower prices and...will consider doing so only when all circumstances dictate a necessity,' he said.

But PropNex's Mr Ismail said that while it was still too early to expect any price adjustment, the mass market segment might see a 5 per cent to 10 per cent reduction in prices should the take-up rate in newer launches be lukewarm. 'This will probably unfold in the next couple of months,' he said.

esthert@sph.com.sg