Emerging value as well as currency movements are leading to a pick-up in high-end home sales here.
Going by Savills Singapore’s analysis of URA Realis data, the trough appears to have been crossed for the volume of private home transactions above S$3 million in value.
The number of private homes that were sold above S$3 million in the first seven months of this year increased 17.7 per cent to 659 units from 560 in the same period last year. In contrast, the number of private homes sold at prices of up to S$3 million is almost unchanged; the figure inched up 0.3 per cent to 8,763 units in January-July 2015 from 8,736 in the same year-ago period.
In both price bands, though, the latest sales volumes are some way off levels in the first seven months of 2013, which captured the buoyant conditions in the Singapore property market – before the total debt servicing ratio (TDSR) was rolled out in late-June 2013.
Commenting on the flat year-on-year growth in the number of private homes transacted in the S$3 million and below category during January to July 2015, DTZ South East Asia chief executive Ong Choon Fah said a chunk of buyers in this price range would be HDB upgraders who tend to be more price sensitive.
“Such buyers have other options open to them, including buying a new Build to Order flat in an attractive location – or they may simply be quite happy to stay put in their existing flat and delay their upgrading decision until private condo prices become more attractive.”
In contrast, said Savills Singapore research head Alan Cheong, the pick-up in transactions in the above-S$3 million category was due to value emerging in the high-end market, where prices have fallen at a faster clip than the overall private housing market.
Savills’ analysis showed that the increase in transactions cut across both the landed and non-landed segments.
The number of landed homes sold rose 13.6 per cent to 318 in the first seven months of this year from 280 in the same period last year. In the non-landed segment, transactions climbed 21.8 per cent to 341 units from 280 units previously.
Mr Cheong highlighted that Savills’ basket of luxury non-landed private home prices has fallen 11.2 per cent from its peak in Q1 2013 to Q2 2015; this outperforms the 6.7 per cent drop in the Urban Redevelopment Authority’s overall private home price index since its Q3 2013 peak. “Moreover, with the appreciation in currencies such as the US and Hong Kong dollars as well as the British pound against the Singapore dollar . . . investors just cannot ignore this yawning price gap between the key gateway cities and Singapore.”
Another reason Mr Cheong cited for the improvement in transaction volumes for private homes above S$3 million is the completion of condo developments such as Leedon Residence in District 10 which appeal to buyers who are more restrained about committing to off-plan sales. “Some buyers may prefer to buy completed units where they can have the look and feel of the actual property before committing,” he added.
A significant proportion, 48 per cent, of the private homes that changed hands at above S$3 million in the first seven months of this year were landed properties.
More compelling prices for landed properties are also behind the improvement in transaction volumes in this segment. Realstar Premier Group managing director William Wong said: “Developers of new landed projects have a certain timeframe to sell off their properties or pay a penalty to the state; some of them are pricing projects more realistically.
“Buyers who have been looking for landed property for the past two years find that the price is more attractive now compared to when they started their search. A brand new boutique bungalow in a central location such as District 10/11, for example in Bukit Timah and Holland, used to go for S$11-12 million a couple of years ago. Now prices are S$1-2 million lower.” Prices are even more attractive in the resale market, for example, in the low-S$8 million range.
Citing another reason for the upturn in transaction volumes of landed homes, Mrs Ong of DTZ said that those buying landed homes are likely to do so for owner occupation and would take a longer-term view. “Some of them could be less affected by the TDSR; in all likelihood they would have an existing property that they could sell. They may take the view that they are upgrading their portfolio, so to speak, and positioning themselves for a bigger price appreciation later on in land-scarce Singapore.”
Realstar’s Mr Wong has also observed keen buying interest in old houses for redevelopment purpose by developers.
This could explain the increase in the number of landed properties bought by companies to 30 in January-July 2015, compared with 21 in the same period last year; in fact landed homes accounted for the majority of private homes above S$3 million that were bought by companies in the first seven months of each of 2015, 2014 and 2013.
For Singaporean buyers, too, the bulk of their purchases over the same periods were landed properties. However, landed homes made up a minority of permanent residents’ and foreigners’ purchases – which is not surprising given the tightening in government approval for purchases of landed properties by non-Singapore citizens in recent years.
The number of landed homes costing more than S$3 million acquired by Singaporeans in January-July 2015 rose 14.2 per cent year on year to 281. In the first seven months of this year, they also bought 161 private apartments and condos in this price category, up 34.2 per cent.
The total 442 private homes costing more than S$3 million that Singaporeans bought in the first seven months reflects a 20.8 per cent increase.
PRs’ purchases climbed 13 per cent to 104 private homes.Purchases by companies also rose by 31.3 per cent to 42 homes from 32 previously.
However, purchases by foreigners continued to fall, easing to 64 units from 69 previously. That said, foreign buying declined only in the S$3-4 million range, but increased for transactions above S$4 million.