By Aileen Lai

Just as we thought the local property market had tanked along with the global economy in late 2008, home values bounced back. Since the second quarter of 2009, snaking queues have formed outside the showrooms of condominium launches.

Developers, quick to respond, are pushing forward their launches to entice eager home-hunters to sign on the dotted line despite over-exuberant pricing. Homes in the heartlands are being snapped up at prices rarely seen outside of the prime 9, 10 and 11 districts. The new Centro Residences, a 99-year leasehold condominium in Ang Mo Kio by Far East Organization, sold quickly at prices starting at $1,150 psf.

Recently transacted home prices at a glance  Click on thumbnail to view

“We have been seeing a bottom-up recovery in Singapore’s property market since February. Buying was initially driven by HDB upgraders who benefited from resilient HDB prices and price-cutting by developers. Subsequently, buying spilled over to the mid-end segment, with local and foreign investors returning to the market,” confirms Foo Sze Ming, investment analyst at OCBC Investment Research.

The upturn in the property market is being further fuelled by the improved economic sentiment, pent-up demand from buyers who held back their purchases last year, low interest rates, high consumer liquidity and possibly en-bloc sellers who cashed out in 2007.

While the market’s fast recovery is to be applauded, it has driven prices up too quickly, to what experts agree may be unsustainable levels. CB Richard Ellis’ analysis of caveats show that the price quantum of non-landed homes between the first and second quarters of this year was up 28 per cent. Between the second and third quarters, prices jumped 
11 per cent for apartments ranging from 400sqf to 700sqf, from $825,000 ($660 psf) 
to $916,000 ($769 psf).  

“In the first quarter, most of the new freehold homes sold were shoebox-sized units in mid- to high-end projects like 
Alexis, Newton Edge, Parc Sophia, RV Suites and The Mercury at a median price of $1,000 psf to $1,200 psf. In the second quarter, a significant proportion were larger family-sized suburban projects like 
I Residences, The Arte and Versilia On Haig, which reflected a median price of $830 psf to $925 psf,” explains Joseph Tan, executive director (residential) of CB Richard Ellis.

The buying pattern shows an optimistic belief that the recession’s worst is over. The latest figures from the Urban Redevelopment Authority (URA) indicate that 2,767 new private homes were sold in July, setting a monthly sales record and showing a jump of 52 per cent from June sales of 1,826 units.

Up to end-September, Sophia Residences sold 210 units at a median of $1,590 psf, 
Volari @ Balmoral sold 82 units at $2,059 psf 
and Viva sold 203 units at $1,537 psf. As developers push up prices, buyer resistance has set in. “There appears to a small upward trend. While the number of transactions declined, those that went through achieved slightly higher prices,” notes Chesterton Suntec International director (research consultancy) Colin Tan.

To dampen speculation, the government has barred deferred payment schemes and will be restarting land sales. These events have left home buyers confused and fearful of missing the boat if they don’t grab a unit soon.

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