S'pore property market shows resilience

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The Straits Times
Jul 6, 2012
S'pore property market shows resilience

Rents and resale prices edging up despite global economic uncertainty

By Esther Teo

MORE evidence has emerged of the ongoing strength of the local property market, with both rents and resale prices defying global economic uncertainty.

In a new report, property consultancy DTZ Research said rents of non-landed suburban apartments rose by 1.9 per cent in the three months to June, after edging up 0.6 per cent in the first three months of the year.

Prime condo rents also enjoyed a boost, inching up 1.5 per cent in the same period.

DTZ said that this was largely the result of a seasonal increase in leasing activity in April and May.

Expatriates relocating to Singapore after summer tend to have their contracts inked during this period.

Despite economic uncertainties hurting expat relocations, rental demand from top-end expats with budgets for luxury apartments also continued to support the high-end market despite the drop-off in relocations now.

On the other hand, cost-conscious mid-tier foreign professionals, with no housing allowance as part of their relocation package, continue to support rental demand for apartments in the range of $3,000 to $7,000 a month, said Ms Margaret Thean, DTZ's executive director of residential.

On the resale front, prices of private homes also gathered pace with suburban landed homes leading the pack. They rose 1.2 per cent to 2 per cent in the quarter, more than the 1 per cent rise for landed homes in the prime districts of 9, 10 and 11.

Resales of non-landed homes also lodged higher prices as buyers in search of better value were diverted to resale properties in the light of benchmark prices set for new suburban launches.

Freehold apartments in the prime districts of 9, 10 and 11 gained 0.5 per cent, reversing the 0.7 per cent fall the quarter before, while suburban leasehold condo prices increased 0.6 per cent, up from 0.3 per cent previously.

Ms Chua Chor Hoon, DTZ's head of Asia-Pacific research, said buying demand for homes is expected to remain healthy owing to the low interest rate and buoyant employment market.

'However, the strong pipeline of developments will intensify competition for purchasers and tenants, and limit price increases particularly in the face of slower economic growth,' she added.

Savills Singapore research head Alan Cheong noted that a record 14,272 homes were launched in the first five months of the year.

Some of the major new launches in the second quarter include Eight Riversuites in Whampoa East, and Flo Residence and River Isles, both in Punggol.

Savills' analysis showed that the median price of non-landed resale homes rose 4 per cent to $1,031 per sq ft (psf) in the second quarter.

Median prices of new homes, however, suffered a slight 0.7 per cent fall to $1,144 psf.

'The price correction for new homes was expected as completion among new developments had intensified post-additional buyer's stamp duty and recent launches saw some initial price rebates and loyalty discounts,' Mr Cheong added.

Still, as there is still a considerable price gap between resale and new homes, resale prices are poised to rise further as they play catch-up with the recent increase in new sale prices.

'Although the euro-zone crisis is expected to generate a fair deal of turbulence, the market has put its faith in the increasing population and the view that asset prices here are bulletproof.'

Mr Cheong said: 'Developers are expected to fast-track their new project launches ahead of any further deterioration in global economic fundamentals and the seventh month Hungry Ghost Festival.'

Mr Joseph Heah, 31, a permanent resident who has rented a unit in Jurong since November last year, said rents have been gradually rising since he moved to Singapore about three years ago.

'Every time the rental contract is renewed, the landlords ask for a higher rent... Even HDB flats are not cheap these days,' he added.

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