En-bloc effect? Prices of condos in non-central locations up by 4.5 per cent: SRX

SINGAPORE — Prices of resale condominiums outside the central region rose strongly last month even though overall transaction numbers, while steadily increasing, are still well down from 12 months ago before last July's cooling measures.

Flash estimates from property portal SRX released on Tuesday (May 14) showed that islandwide, just half as many homebuyers committed to a resale condo unit last month than in April last year, yet units outside the central region changed hands at prices 4.5 per cent higher. 

Units in the core central region rose 3.1 per cent and those in the the rest of the central region were up a fairly modest 2.4 per cent.

WHY IS THIS SO?

Analysts told TODAY that the strong rise in prices outside the central region could be explained by househunters who were displaced by en-bloc sales and hit by the property cooling measures — they are now buying flats in the vicinity of their former homes owing to the relative affordability and a sense of familiarity with the areas.

Ms Christine Sun, head of research and consultancy of OrangeTee & Tie, said that some buyers may have found these completed homes to be attractive given their lower per-square-foot pricing and typically bigger living spaces, compared to new launches in the surrounding areas.

Mr Nelson Lim, key executive officer of real estate firm C&H Properties, said that units outside the central region might be considered desirable given their affordability in the context of the prevailing cooling measures.

In July last year, the Government shocked the market when it increased the Additional Buyers’ Stamp Duty (ABSD) by 5 percentage points for individuals and 10 points for entities. Loan-to-value limits were also tightened which affected property hunters getting a housing loan from a bank.

Other factors boosting the appeal of homes outside the central region could include the focus on connectivity and the availability of regional amenities, Mr Lim added.

Mr Alan Cheong, executive director of research and consultancy at real estate service provider Savills, took a similar slant. “For those displaced by collective sales, they ultimately need to find a replacement abode and still wish have enough cash left over for discretionary use,” he said.

“Since (houses outside the central region) is where private housing is the ‘cheapest’, the trickle-down effect caused prices to rise most.”

OTHER NOTABLE SRX FIGURES FOR APRIL:

• Resale volume of condominiums rose month-on-month to 830 — 3.4 per cent higher than in March, which already posted the highest volume since the latest property cooling measures were in force last July.

• Resale prices rose 0.9 per cent last month, in the third consecutive month-on-month rise. In all, prices have risen by about 2 per cent in the first four months of the year.

• Overall year-on-year price hike: 3.6 per cent.

HOW MUCH DID PEOPLE OVERPAY LAST MONTH?

This would be S$10,000, a sharp jump from March when homebuyers still underpaid for their flats by some S$4,000.

This brings SRX’s overall median transaction level over its computer-generated market value called X-value (TOX) to the highest point since the start of the cooling measures last July. The TOX is an indicative measure of how much a buyer is underpaying or overpaying for a unit.

Among districts with more than 10 resale transactions last month:

• District 2 (Anson and Tanjong Pagar) recorded the highest TOX of positive S$50,000, followed by District 12 (Balestier, Toa Payoh and Serangoon) which had positive S$49,000.
• District 4 (Telok Blangah and Harbourfront) recorded the lowest TOX of negative S$34,000, followed by District 25 (Kranji and Woodgrove) which had negative S$14,000.

WHY IS THIS SO?

Analysts said that the higher TOX sale prices are also related to the en-bloc fever that fizzled out.

Mr Cheong from Savills said: “In the words of a beneficiary of a collective sales take-out, sellers of resale flats are now opening their mouths ‘big big’ and asking for the sky.”

Those selling know that the buyers out there looking for a replacement home “have a largesse of cash from their collective sales 'lottery win'”, he added. For instance, resellers of three-bedroom units at Hume Park 1 are now asking for about S$1,200 psf when these units were transacted in the last quarter of 2018 at about S$950 to S$1,050 psf, he pointed out.

Ms Sun from OrangeTee & Tie said that there could be a correlation between new condominium launches and the positive TOX. Some sellers may have raised their asking prices by taking their cue from prices at nearby project launches, she said.

For instance, the highest TOX levels were seen in districts where new projects were launched, such as at Marina One Residences and Wallich Residence in Districts 1 and 2; Margaret Ville, Stirling Residence, Artra and The Crest in District 3; and Park Colonial, Jui Residences, The Addition and the Tre Ver in Districts 12 and 13.