Resale property market in doldrums

[Blaze]

To complete the downturn in SG property market circle, the sales of resale units has become more and more difficult. The reasons for this are listed in the recent article below.

In short, developers make more money and buyers lose more, as new investors are looking to buy uncompleted properties at project launches, and not resale units. If you are planning to invest in SG property, be prepared that it will be difficult to get rid of your unit later (unless of course you are willing to lower the price).


Secondary market for private homes heading for doldrums
by Colin Tan
04:46 AM Feb 03, 2012

The secondary market for private homes is shrinking. Of that, there is no doubt. The trend has been clear since the second half of 2010, but what is unnerving is the rate at which demand is shrinking.

Official figures show that the number of resale and sub-sale deals have fallen by more than a quarter last year compared to 2010. Their market share of total sales has also fallen to about 57 per cent from 61 per cent in 2010.

With respect to revised seller's stamp duty (SSD), those buying a private home on or after Jan 14 last year have to pay a duty of 16 per cent, 12 per cent, 8 per cent and 4 per cent if they sell the property within the first, second, third and fourth year of purchase, respectively.

Analysts say the majority of investors prefer to buy uncompleted properties at project launches as they can minimise their capital exposure with progress payments. Also, by the time the property is completed in about three to four years, they would be hit only by a relatively small 4 per cent SSD, if at all.

While we may disagree on the extent, most of us would agree that the majority of buyers at project launches today are predominantly investors. The majority of upgraders or owner-occupiers would have been priced out of the primary market by now.

Last year was the first full year that executive condominiums (ECs) made their presence felt again in the non-HDB housing market. There were more than 2.7 times the number of ECs sold last year than in 2010.

For the first time in a very long time, a third alternative had emerged for upgraders and owner occupiers - apart from just choosing between units offered at project launches and those in the secondary market. If we include ECs in the analysis, it is obvious where the demand has shifted to.

I fear investors may find it increasingly difficult to dispose of their completed properties from this year onwards unless prices at launches resume their climb, which may alter the dynamics between the different markets yet again. But what are the chances of this happening?

[Agent007]

Trying to justify your stupid decision to sell or wot? Prices are still going up and you seem to be unhappy about it. Tough sh1t plonker. You should not have sold just when we are starting the greatest bull run ever. IDIOT .

[Woodbridge calling...]

It's ok that you don't care that people are now convinced that you're an utter loser who's way underwater and desperate to tell anybody anything to try and prop up the market in a hopeless attempt to stem the bleeding of your money. But why do you pepper your posts with English slang when we all know that you spent a maximum total of 2 weeks there?

Do you loathe your local identity that much? Do you perhaps secretly revere the very people you come here day after day to slag off?

[idoot agent]

Trying to justify your stupid decision to sell or wot? Prices are still going up and you seem to be unhappy about it. Tough sh1t plonker. You should not have sold just when we are starting the greatest bull run ever. IDIOT .

No fool, YOU shouldnt have bought when you did.  You know whats around the corner.  The biggest downturn ever.

[Blaze]

Look what I found... Several days ago I mentioned that the property market is heading towards a massive oversupply. Looks like I was right again.


Wave of supply to hit property market

by Ku Swee Yong
Updated 09:30 AM Feb 03, 2012

Fourth-quarter data released last Friday by the Urban Redevelopment Authority (URA) point to a massive, unprecedented wave of upcoming supply in the residential, commercial and industrial segments, sounding a clear warning to investors who may have entered the market recently at high prices.

RESIDENTIAL OVERHANG

Four quarters ago, the expected private home completions for last year and this year were 8,430 and 8,116 units, respectively. We ended last year with 12,469 units completed, 48 per cent higher than the number published four quarters ago. The number for this year has also been revised upwards to 13,308 units.

Included in the expected 31,001 units that are expected to obtain TOP (temporary occupation permit) in 2015 are 9,501 units that were already under construction in 4Q2011. To have 9,501 units taking another up to four years to complete is unlikely. Most residential projects are completed between 24 and 36 months after piling begins. Therefore, the bulk of the 9,501 units should be completed in 2013 or 2014.

Looking ahead, we can expect the completion of residential projects to be ahead of schedule, i.e. the wave of supply will hit us sooner. This time round, the avalanche of supply might coincide with a faltering global economy amid weak occupier demand. Investors should seriously take these "earlier-than-expected supplies" into consideration before making their investments.

The rate of vacancy of private homes have already crept up from 5 per cent (or 12,883 units) at the end of 2010 to 5.9 per cent (15,980 units) last December. The imminent flood of supply will likely push this higher.

PAIN LIES AHEAD

The flood of supply seems to be sweeping across almost all segments. While holding power is strong today due to low interest rates, real estate valuations may deteriorate quickly once the macro-economic environment collapses, causing pain especially to the recent investors who have bought high.

[silly agent]

Well it wasnt so long ago they were whipping up hype telling us about the latest developments all being snapped up by buyers who had queued overnight with their check books.. 

Once these sorts of black financial reports start flying around, we all know how its going to end up. The panic has already started and these reports put the cat amongst the pigeons. 

Theres a huge global downturn coming which will likely last for quite a few years.

The whole world is in an utter mess.

The agents cant whip up any more hype now.  Its gone beyond hype.

The misinformed who were sold false dreams are left to pick up the pieces now.

[Agent007]

Don't believe the hype.

[twit agent]

Too late.  They believed it and bought with the knowledge that the world was headed for major depression. 

[Agent007]

Wrong again. The greatest bull run ever has just started and you refuse to accept it. Keep paying the rent.

[Why Wouldn't We?]

Why wouldn't we keep paying the rent? We are not stuck here like you are.

[Blaze]

I've been following property discussion threads in some European countries where prices have already declined 6 to 12 months. It's always the same trend between news and those in denial:

Stage 1)
News: Economy might be slowing down and bring down housing prices
In denial: It won't happen here, we are different, our economy won't be affected

Stage 2)
News: Economy did slow down and housing prices will decline
In denial: Even if it's slowing down, housing prices won't be affected and there is no bubble

Stage 3)
News: Housing prices did come down
In denial: Ahhh, keep on paying the rent

The international code for Losers In Denial is 'keep on renting' when they have been proven wrong. When NUS stated that SG property prices declined 0,8 per cent in December alone, idiot Agent thought they are all renting.

[Agent007]

0.8%

That just about sums you up.

What about January figs? U not seen yet or R U just deliberately avoiding???

[Agent007]

Sorry I was wrong again.   Ignore my last comment. I cant go on in denial any more.

[Agent 003.5]

Oh no - looks like my fellow agent is wrong. We must keep trying harder to deny fact checked articles.

Private-property prices fall sharply in core area

By Reico Wong

THE property cooling measures introduced late last year have started to show a significant impact on the housing market.

Prices of private apartments and condominiums have dropped by as much as 10.2 per cent in the Core Central Region since the fourth quarter, suggesting that home buyers became more cautious after the additional buyer's stamp duty took effect in December.

The average selling price of such units has fallen to $1,600 per sq ft (psf) from $1,781 psf in the fourth quarter, according to data released yesterday by the Singapore Real Estate Exchange (SRX)...................................................................

[Agent007]

Incorrect information. Prices are still going up.