Slump in private home resale market

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#1
I don't really see any "slump" - is the headline simply meant to turn heads? Volumes are down but prices are firm, while developers are offering discounts to tempt people to take up big loans, so what's changed? Huh

The Straits Times
www.straitstimes.com
Published on Apr 11, 2013
Slump in private home resale market

SRX data shows March volumes down by about 50% year on year

By Melissa Tan

THE private home resale market took a major hit last month from the seventh round of cooling measures unveiled in January.

Resale volumes in March slumped by half from the same month last year.

The impact on prices was more muted, though, as average resale prices slid 2 per cent from February, Singapore Real Estate Exchange (SRX), a consortium of the country's leading property agencies said yesterday.

A total of 609 transactions were recorded in March by SRX. This was 87 per cent higher than in February, as Chinese New Year fell within that month.

But analysts noted that the figure was about 50 per cent lower than March last year.

Condo resale volumes for the January to March period were also nearly 40 per cent lower than the preceding quarter.

DWG senior manager Lee Sze Teck cited sellers' "reluctance" to lower prices. This contrasts with the new sales market, where developers have been quick to offer incentives to offset the impact of cooling measures, Mr Lee said, pointing out that new sales rose by about 12.5 per cent in the first quarter from the preceding one.

But though volumes have come down sharply, prices did not follow suit in March.

The dip in condo resale prices was largest in the suburban region, which posted a 3 per cent decline to $1,071 per sq ft on average. That is still above the psychologically daunting $1,000 psf threshold that suburban condo resale prices exceeded for the first time in February this year.

City centre average resale prices dropped 2 per cent to $1,788 psf, while city fringe prices stayed largely flat at $1,301 psf on average last month, SRX said in its flash report.

"As long as interest rates stay low, holding costs are low and sellers are not compelled to cut prices," said ERA Realty key executive officer Eugene Lim.

Softening prices combined with higher rents boosted rental yields islandwide last month.

The city fringe had the highest gross rental yield at 3.8 per cent, followed by suburban yields at 3.7 per cent. The city centre had the lowest rental yield at 3.1 per cent.

On a quarterly basis, however, overall condo resale prices grew 4.2 per cent, owing to stronger increases in January and February, SRX said.

A DTZ report yesterday said price growth across most non-landed segments slowed by more than half in the first quarter compared with the fourth quarter last year.

But sequential price growth in the first quarter was stronger than in the corresponding period last year, which was immediately after an additional buyer's stamp duty was imposed for the first time.

This could be due to buyers "getting accustomed" to the duty and earlier tighter loan restrictions, said DTZ.

March's flash report is the first time SRX has used a weighted average to compute overall average resale price.

Without this, noted OrangeTee research and consultancy head Christine Li, March resale prices would have increased from February.

melissat@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
They were right , to them this is classified as SLUMP already.
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#3
I think one of the reasons why they are calling this a slump is because prior to the recent new regulations, discounts were not reflected in the transaction. Hence, if an apartment was to be sold for 3 million dollars, with 1 million dollars in discounts such as housing renovation coupons, it would have still be reflected as a 3 million dollars transaction even though, effectively, the developer only sold it for 2 million dollars.

One of my aunties tried to sell her apartment, which she bought for 3.4 for 4 mill but she was not able to because even though the developer's published price of the same apartment is 4.1, there were effectively selling it for 3.8 mil after you take into considerations the discounts that comes with it.

I find such methods of artifically propping up prices devious. I am really happy that these new regulations to truly reflect the actual price sold is taking into effect. In the coming months, I expect to see the prices "drop" because developers have to publish the actual price sold + the discounts given. Right now it is still a mystery. You will only know it if you are serious buyer.
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#4
The slump refers to volume rather than price as far as I can tell. Let's see.
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#5
The article was very obviously referring to a slump in March on the volume in the resale market, I see it mentioned at least 3x. Nothing vague to me, don't let your perception / thoughts rule your eyes...Big Grin

Quote:SRX data shows March volumes down by about 50% year on year
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Resale volumes in March slumped by half from the same month last year.
Condo resale volumes for the January to March period were also nearly 40 per cent lower than the preceding quarter.

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But analysts noted that the figure was about 50 per cent lower than March last year.


It also stated that the price was not as badly hit ie. no slump in price. Nothing misleading in the article.. Perhaps own perception misleading ownself??

Quote:The impact on prices was more muted, though, as average resale prices slid 2 per cent from February, Singapore Real Estate Exchange (SRX), a consortium of the country's leading property agencies said yesterday.
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But though volumes have come down sharply, prices did not follow suit in March.
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#6
(11-04-2013, 07:34 AM)Musicwhiz Wrote: I don't really see any "slump" - is the headline simply meant to turn heads? Volumes are down but prices are firm, while developers are offering discounts to tempt people to take up big loans, so what's changed? Huh

Hi MW,

The article is referring to resale market, not new launches. I had been tracking the resales, and it is really true that the volume is dropping, and the price is not. In fact, price of some development are still on an uptrend. As mentioned in the article, with the low interest, there is no hurry for the sellers to slash price. The bouyant rental market is also supporting the price. Thus, it back to what I believe in, price will only start to get hit when interest rates start to go up, and the rental market start to slump, which I predict will start happening in 2015. Only then, I will enter the property market again.
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#7
(12-04-2013, 02:02 PM)NTL Wrote:
(11-04-2013, 07:34 AM)Musicwhiz Wrote: I don't really see any "slump" - is the headline simply meant to turn heads? Volumes are down but prices are firm, while developers are offering discounts to tempt people to take up big loans, so what's changed? Huh

Hi MW,

The article is referring to resale market, not new launches. I had been tracking the resales, and it is really true that the volume is dropping, and the price is not. In fact, price of some development are still on an uptrend. As mentioned in the article, with the low interest, there is no hurry for the sellers to slash price. The bouyant rental market is also supporting the price. Thus, it back to what I believe in, price will only start to get hit when interest rates start to go up, and the rental market start to slump, which I predict will start happening in 2015. Only then, I will enter the property market again.

That's true. I'm selling my house and sure ain't going to reduce the price...
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