Secondary Market buzzes as Prices fall

Q1 sees rise in resale and subsale deals as prices get more attractive.

By Kalpana Rashiwala
Published: April 24 2009,
The Business Times

(SINGAPORE) The pick-up in private home sales by developers has spilled over to the secondary market. Falling prices are greasing the flow.

Caveats have been lodged for 1,063 private homes in the resale market in the first three months of this year, up 11.7 per cent from the preceding quarter. In the subsale market, 384 caveats were lodged in Q1 2009, reflecting a 44.4 per cent increase from the Q4 2008 figure, according to Savills's analysis of caveats captured by the Urban Redevelopment Authority's Realis system.

Resales and subsales refer to secondary market transactions. Subsales involve projects that have yet to obtain Certificate of Statutory Completion while resales relate to projects that have received CSC. CSC is typically obtained anywhere from three to 12 months after the project receives Temporary Occupation Permit (TOP).

The average prices of resale and subsale transactions at the most popular projects in Q1 2009 were generally lower than in the preceding quarter as well as the same period last year.

City Square Residences, the most popular subsale project in the first three months of this year with 41 units, saw an average price of $804 psf, down 5 per cent from the $845 average subsale price in Q4 2008 and 15 per cent below the $947 psf average subsale price seen in Q1 2008.

Average prices for 11 of the 12 most popular subsale projects in Q1 this year fell between one and 14 per cent from the preceding quarter. The exception was Clementiwoods Condo, where eight subsale deals were done at an average of $664 psf in Q1, some 5 per cent higher than in the previous quarter but down 7 per cent from the same period a year ago.

Compared with Q1 last year, average prices for all 12 top-selling subsale projects in Q1 2009 fell between 4 per cent (Centris) and 36 per cent (The Cosmopolitan).

As for resale transactions, the 11 hottest developments saw quarter-on-quarter price declines ranging from 4 per cent (for The Lakeshore) to 19 per cent (Bayshore Park) in Q1. The Lakeshore was the most popular resale project in the first quarter, with 27 units changing hands, followed by Costa del Sol, with 11 units.

Savills Singapore head of research Priya Sengupta noted that the 11 most popular resale projects in Q1 were all in the mass and mid-tier sectors. 'Amid the economic uncertainties, affordability remains a key consideration for home buyers/investors; 100 of the 113 deals in the 11 most popular resale projects in Q1 were at below $1 million,' she said.

Resale activity for high-end projects was limited. 'This could be attributed to the price disparity between sellers and buyers as the latter expect further downward price adjustment in the near future, as well as the stricter home loan criteria in terms of loan-to-value ratio, especially for investors,' Ms Sengupta said.

Mass and mid-tier projects also saw more subsale transactions than high-end projects. Much of the subsales activity in Q1 surrounded projects that have either received TOP recently or are close to receiving it. For instance, City Square Residences, The Esta, The Sail @ Marina Bay, The Cosmopolitan and Rivergate have received TOP in 2008/2009, while One Amber and The Centris will get TOP soon, Savills said.

Market watchers said that this could be because many specuvestors who bought on deferred payment schemes (DPS) may be inclined to offload their units as the TOP date approaches, when they have to pay up the bulk of the purchase price to developers.

However, CB Richard Ellis executive director Joseph Tan pointed out that regardless of whether buyers opted for DPS, private housing projects are typically a hive of activity around the time they receive TOP, drawing buyers who want to move in themselves or to rent out immediately.

He also attributed the increase in subsale and resale transactions in Q1 to 'prices being at fairly reasonable levels now', with the stock market rally improving sentiment.

Mr Tan said that whether the buzz in the secondary market continues will depend on the stockmarket. 'So long as the Straits Times Index remains fairly stable, it will give comfort to investors that the property market is close to bottoming out, given the price correction in the past 12-15 months,' he added.

According to DTZ's figures, which are based on resale prices, the average freehold luxury condo and apartment price of $1,880 psf in Q1 this year marks about a one-third drop from the peak of $2,800 psf in late 2007/early 2008.

The most expensive subsale deal (in terms of psf price) in Q1 this year was a 29th floor unit at Orchard Residences that changed hands for $2,579 psf. In absolute dollar quantum, the most expensive subsale deal was an 11th floor apartment at The Tate Residences at Claymore Road, which sold for $5.93 million ($1,850 psf).

As for resale transactions, the top grossers were a 10th floor apartment at Richmond Park at Bideford Road which sold for $2,199 psf and a 25th floor unit at Four Seasons Park at Cuscaden Walk that fetched $6.5 million ($1,701 psf)

Declining property Prices

Data came below flash estimates.

URA released the property statistics for 1Q09 last Friday.

Data came out weaker than the flash estimates released earlier this month.

In the residential sector, the URA Property Price Index and Rental Index

plunged 14.1% and 8.5% QoQ to 139.9 and 139.4 respectively in 1Q09.

Primary transaction volume surged 520% to 2,596 units, driven by the

pent-up demand in the HDB upgraders' market. While subsale and resale

transaction volumes improved QoQ in 1Q09, these are still comparatively

weaker than the volumes achieved in 1Q-3Q 2008. Launched but unsold

inventories declined from 3,880 units (end 4Q08) to 3,333 units in 1Q09.

HDB resale prices fell marginally by 0.8% QoQ in 1Q09 and prices continued

to be supported by strong transaction volume which increased by 4.2%

QoQ to 6,446 resale transaction in 1Q09.

Rapid deterioration in the office sector. In the office sector, prices and
rents of office space fell 12% and 10.7% QoQ respectively in 1Q09. 603,855
sq ft of office space was completed in 1Q09 but occupied space declined
by 322,917 sq ft in 1Q09. As such, office vacancy rate increased from
8.8% (end 4Q08) to 10% (end 1Q09). On a more positive note, developers
continue to put on hold their plans to develop more office spaces as the
pipeline of office space declined by 472,535 sq ft in 1Q09. Retail sector
performed relatively better, with prices and rents declining by a smaller
4.2% and 3.3% QoQ respectively in 1Q09.

Too early to turn positive. While buying sentiment in the property market
has improved over the last 3 months, we believe that it is still too early to
turn positive on the property sector. Primary transaction volume fell to
more than a decade low of 4,264 units in 2008 and we believe that much of
the recent demand could have come from buyers who delayed their
purchases in 2008. In addition, there were precedents whereby strong
transaction volume in one quarter was just a 'blip' followed by decline in
volume and prices that continued for quarters. Sustainable recovery could
only come with improvements in economic data and employment rates. In
the office sector, there is still a potential supply of 13.9m sq ft of office
space in the pipeline but developers are likely to continue delaying plans
to build more office space and thus easing some pressure on the rising
office vacancy rate.

Household Maintenance - Spalling Concrete

Spalling Concrete

Spalling concrete is the cracking and bulging of the concrete ceiling caused by the corrosion of the reinforcement bars that forced the concrete to crack over a period of time.

Repair Method

Hack the bulging concrete until the reinforcement bars are exposed.
Use a wire brush to brush off the corroded bars.
Apply anti corrosion primer to the bars.
Apply bonding agent to affected area.
Patch up the affected area with polymer modified cement mortar or epoxy mortar
Allow it to dry before painting the affected area to match the existing colour.

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