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Resale price index very close to record high of Q41996; Q2 transactions up 22%

THE Housing and Development Board (HDB) has announced that its Resale Price Index rose by 4.5 per cent in Q2 2008 over the previous quarter and 8.4 per cent since Q4 2007.

The number of resale transactions also increased by 22 per cent quarter on quarter to hit 7,760 transactions.

On a half-yearly basis, a total of 14,120 transactions have been recorded so far, almost half of the 29,450 transactions for the whole of 2007.

The HDB Resale Price Index is now hovering very close to the all-time peak in Q4 1996, boosted by high resale prices in estates like Queenstown and Bukit Merah where the median price for five-room flats is now around $600,000.

But while a buoyant resale market can translate into a stronger HDB upgrader base, it may still be too early for developers to count on upgraders to prop up the private residential market.

DTZ executive director and regional head for consulting and research, Ong Choon Fah, said that HDB upgraders are ’still price-sensitive’.

According to DTZ’s analysis, HDB upgraders accounted for 28 per cent of all private homes bought in Q1 2008, up from 22 per cent in the preceding quarter.

However, in 1998, when private property prices bottomed out, HDB upgrader transactions peaked at 62 per cent of all private property transactions.

And when the property market tanked again in 2002, HDB upgraders went in to buy up to 59 per cent of all private property transacted.

While the numbers suggest that HDB upgraders still find private property too expensive, Mrs Ong also pointed that HDB does now offer a ’spectrum’ of property types to cater to more specific needs and price brackets.

Mrs Ong was referring to HDB’s new Design, Build and Sell Scheme flats which have been selling well.

Sources also say that the 578-unit Park Central at AMK has received around 1,000 applications since its launch on June 23.

HDB has also launched a total of 4,524 new flats under the Build-To-Order (BTO) system for H1 2008.

ERA Asia Pacific assistant vice-president Eugene Lim points out that HDB upgraders tend to be those who sell their five-room or executive flats, and according to his analysis, this number has not increased significantly.

Five-room flats made up 26 per cent of all HDB resale transactions in Q2 2008, up from 25 per cent in the previous quarter while executive flats made up 9 per cent, up from 7 per cent quarter on quarter.

Four-room flats made up 37 per cent of all resale transactions, and Mr Lim also notes that the median price for this segment saw the highest increase by $15,000 to $300,000.

Mr Lim believes that the upgrader effect on the private property market could be curtailed by affordability too.

‘Most upgraders will be looking for properties in the $650-$750 psf bracket,’ he said.

Interestingly, the influx of new permanent residents (PRs) here has added to the demand for resale flats.

Mr Lim estimates that 20 per cent of buyers in the resale segment are PRs, up from 10-12 per cent a year ago.

However, whether PRs are partially responsible for the buoyant resale market is not known. HDB has not revealed the number of flats bought by PRs.

Perhaps a more interesting development is that the HDB Resale Price Index has begun to diverge from the private property price index, which grew by just 0.2 per cent in Q2 2008.

Still, most property consultants believe the chances of the two indices decoupling, to represent a disconnected private and public property markets, are remote.

Knight Frank director (research and consultancy) Nicholas Mak also highlights that between Q2 2002 and Q1 2004, prices of private homes fell, while HDB resale prices increased.

During this period, both indices did, however, remain relatively flat.

Mr Mak does believes that any divergence in price trends, if any, will only last for a few quarters before a correlation is re-established.

He added: ‘Both private and public sectors do relate to the same macro-economic factors.’

DTZ’s Mrs Ong also said that both sectors are linked by the ’substitutional effect’.

‘If prices are too high in the private housing market, buyers will shift to the public housing market,’ she added.

She also noted that significant shifts in price movements only tend to follow changes in housing policy and related spheres like Central Provident Fund.

Savills Singapore director (marketing and business development) Ku Swee Yong believes that HDB upgraders will eventually return to ‘lend strong support’ to the private property market, citing the interest, if not the take-up, in new mass-market launches like Livia and Clover by the Park as examples.

Source : Business Times - 26 Jul 2008

A number of residential projects also get the nod

A STRING of residential, commercial and industrial projects received provisional permission from the Urban Redevelopment Authority (URA) in the second quarter of this year.

Far East Organization unit China Classic received provisional permission to build a 384-room hotel at Cross Street, while Hotel Plaza got the nod for a 345-room hotel at Upper Pickering Street.

Resorts World at Sentosa got the go-ahead to build a hotel with 1,352 rooms as well as 45,090 sq m of retail space in the central zone of its integrated resort.

Residential projects that received URA’s provisional permission in April-June this year include Frasers Centrepoint’s 717-unit condo at Lakeside Drive in the Boon Lay area, Chip Eng Seng’s 372-unit condo at Elias Road in Pasir Ris; and UOL/Peak Century’s 643-unit condo at Simei Street 4. All these projects have 99-year leasehold tenure.

EC Prime Pte Ltd - controlled by Melvin Poh, Tan Koo Chuan and Saw Pik Kee - received approval to develop 228 apartments at Alexandra Road.

URA also gave the nod in Q2 for the development of 110,790 sq m of business park space in three new projects - to Soilbuild Group Holdings to develop a facility named Solaris at Ayer Rajah Avenue/Fusion Walk (42,780 sq m); to Lawrence Leow’s Crescendas Bionix Pte Ltd to develop 41,200 sq m at Biopolis Phase 3; and to Ascendas for a project at Changi Business Park Crescent (26,810 sq m). Business park space can meet the office needs of some firms, for example, backroom operations, URA noted.

Provisional permission for multiple-user factories were also granted for projects at Commonwealth Drive and Jalan Tepong. Trio Link Development clinched approval for a 21,570 sq m industrial development at Playfair Road.

UOB Kay Hian Trading obtained URA’s go-ahead for its transitional office development at Anthony/ Scotts roads (13,020 sq m).

URA also gave provisional permission to Ritzland Investment for 12,050 sq m of offices at Mountbatten Road.

Source : Business Times - 26 Jul 2008

HDB resale flats, however, do well, strengthening in value

IT’S official: the private housing market has gone soft.

Prices peaked and rental growth braked sharply between April and June, with property consultants forecasting the beginning of a decline.

But Housing Board resale flats defied the trend and continued to strengthen in value as sales grew amid strong demand for cheaper homes.

Private home prices inched up just 0.17 per cent in the quarter - the least in four years and well below the 3.8 per cent in the first quarter.

The minuscule rise, announced by the Urban Redevelopment Authority (URA) yesterday, was even below the 0.4 per cent increase the agency had predicted at the beginning of this month.

This is the first time that the official figure has come in lower than forecast, ‘a strong indication that home prices are finally softening’, said Ms Tay Huey Ying, director of research and consultancy at Colliers International.

Prices are being dragged down by stubbornly gloomy market sentiment, stemming from the slowing global economy, high inflation and erratic stock market, say experts.

Developers have started to price projects more ‘realistically’ and individual home sellers are accepting lower offers, leading to an overall moderation of prices, according to Mr Li Hiaw Ho, executive director of CBRE Research.

In prime districts, prices of luxury homes dipped for the first time in four years after a spectacular climb of almost 70 per cent since 2005.

‘This is the first fall since the start of the property boom in 2004 and could be the turning point in the price trend,’ said Mr Nicholas Mak, Knight Frank’s director of research and consultancy.

City-fringe and suburban homes barely fared better, with prices rising below 1 per cent in the second quarter.

Growth in home rents also halved in the second quarter to just 2.5 per cent, the lowest in two years. This could be due to fewer expatriates coming in as well as landlords starting to lower their asking rentals, said Mr Mak.

CBRE’s Mr Li predicts an ‘inevitable’ correction in prices ‘to the tune of 5 per cent to 10 per cent’ in the second half of the year.

But Ms Tay from Colliers believes Singapore’s mid-term prospects remain positive on the back of the two integrated resorts. This will ‘hold prices steady and ensure they do not fall by more than 3 per cent in the third quarter’, she said.

Still, caution prevails amid a large chunk of unsold homes waiting in the pipeline. Developers are sitting on some 12,500 new homes that are ready for launch, said URA.

Hopeful homebuyer Timothy Gan, 27, was cheered by the news that prices may fall. ‘I’m waiting for their prices to fall so I can get married,’ said the civil servant.

Prices and rentals of offices also grew more slowly in the quarter, as firms eased pressure on office supply by moving out of the central areas.

The bright spot is the HDB resale market, where prices keep rising due to higher valuations and strong demand from upgraders, downgraders and permanent residents, said Mr Eugene Lim, assistant vice-president of property agency ERA Asia-Pacific.

Resale deals jumped 22 per cent to 7,760 transactions in the second quarter, boosted by more sales of bigger flats. A quarter of all flats sold between April and June were five-room and executive flats, said Mr Lim.

Source : Straits Times - 26 Jul 2008

Ruling comes after 3 days of intense hearings to meet en-bloc deadline

ANY hopes of collecting a windfall for their flats by the more than 400 owners of Tampines Court were dashed yesterday when their collective sale was thrown out by the Strata Titles Board (STB).

While the majority owners were devastated, minority owners sobbed in relief when the STB read out its decision to a packed room at its Maxwell Road office.

STB deputy president Alfonso Ang said: ‘From the evidence…the transaction is not in good faith, taking into account the sale price and the method of distributing the proceeds of the sale.’

Lawyer N. Sreenivasan, who represented the minority owners, had argued on Tuesday that the sales committee had not obtained an updated valuation of the 560-unit estate when the deal was signed last year. The valuation used was dated from 2005.

The controversial $405 million deal also involved an amount of $10 million called the beta sum that is meant to compensate owners for financial loss.

Mr Sreenivasan said this was unfairly distributed among owners at the discretion of the sales committee.

The arguments seem to have struck a chord with STB, whose decision was considered unusual by industry analysts as the board is perceived to generally approve sales.

Yesterday’s ruling came after three intense days of hearings as the board fast-tracked a conclusion.

The High Court had ordered the STB to bring forward an Aug 7 hearing to Monday so objectors could be heard before the sale agreement expired yesterday.

A decision by yesterday was crucial as the buyers - Frasers Centrepoint and Far East Organization - would not grant an extension. The STB’s ruling now means the sale is dead.

Lawyers from Phang & Co, who represented the majority owners, said they were ‘discussing options’. But with no sale extension, an appeal to overturn the STB ruling will be futile.

Meanwhile, unhappy majority owners are wondering what went wrong. They stood to collect a payout of about $700,000 each - as much as $300,000 above the purchase price, depending on when they bought their home in the 99-year leasehold estate. One majority owner who declined to be named said she was frustrated that the sale took so long.

‘We don’t understand why the sales committee was dragging its feet,’ she said.

The committee seems to have shot itself in the foot. The sale conditions had all been met by July 25 last year, yet the committee delayed seeking standard STB approval until Jan 7 this year.

It said it wanted to wait for an STB ruling on the Gillman Heights sale as its fate could have had a bearing on the Tampines Court deal as both were former Housing and Urban Development Company estates.

But another majority owner, Ms Irene Cheang, was more forgiving towards the committee: ‘It’s a thankless job, and we cannot blame them for taking this up.’

Minority owner Niamh Choo, who had tracked the sale process on her blog, tampinescourt.blogspot.com, was ‘ecstactic’ at the result.

‘It was an inevitable decision. We had a very strong case,’ she said.

‘Now that we get to keep our homes, I hope residents will band together and can be neighbours once again.’

The STB has yet to disclose the grounds for rejection. It may do so at a later date.

FINAL VERDICT

‘From the evidence…the transaction is not in good faith, taking into account the sale price and the method of distributing the proceeds of the sale.’

STB DEPUTY PRESIDENT ALFONSO ANG

NOT SURPRISED

‘It was an inevitable decision, we had a very strong case. Now that we get to keep our homes, I hope residents will band together and can be neighbours once again.’

MINORITY OWNER NIAMH CHOO

NOT AT FAULT

‘It’s a thankless job, and we cannot blame them for taking this up.’

MAJORITY OWNER IRENE CHEANG, who was more forgiving towards the sales committee
 
Source : Straits Times - 26 Jul 2008

CAPITALAND, the lead buyer of Gillman Heights, has asked the Court of Appeal to review one point of a High Court ruling that allowed the estate’s collective sale to proceed.
 
Its move comes after a group of 10 minority owners from the estate filed an appeal over the sale earlier this week.

CapitaLand bought the $548 million Gillman Heights site together with Hotel Properties and two private funds. The sale was opposed by some owners but was eventually given the go-ahead by the High Court.

But in dismissing the objecting owners’ appeal, the Court also ruled that the sale committee could not agree to extend the deadline for obtaining the Strata Titles Board’s approval to Feb 5.

This was despite a supplemental collective sale agreement that had made a valid extension of the deadline to this date.

It is this point that CapitaLand is focusing on. Its legal move is to protect itself if the point is raised by the minority owners at the court hearing.

A spokesman said: ‘The filing of the cross-appeal is primarily technical and the aim is to preserve and strengthen our position in the Court of Appeal hearing.’

Source : Straits Times - 26 Jul 2008