Record number of homes to be built, further easing prices

Straits Times: Sat, Jan 28

THE latest housing data shows that a record number of uncompleted private homes are in the works, in the wake of an unprecedented roll-out of land parcels by the Government in recent years. The aim was to cool prices and property analysts say it seems to be working. They believe private home prices will flatten or even fall against this backdrop after moderating sharply in the three months to Dec 31 across residential, commercial and industrial property. Semi-detached home prices fell, the first segment to move lower since 2009. The data from the Urban Redevelopment Authority (URA) released yesterday showed a supply of 77,089 uncompleted homes as at Dec 31 - the highest figure since data was first made available in 1999. And the number of these homes still seeking buyers is steadily climbing. For example, fourth-quarter data showed there were 17,084 uncompleted homes unsold in launch-ready projects - a 23 per cent jump from a year earlier. The number of unsold units in already launched projects also jumped 58 per cent to 5,584 units in the fourth quarter. Still, this is a far cry from the alarming levels seen in the 1998 downturn when nearly 9,000 units at launched projects were unsold in the first quarter of 1998, said Mr Ong Teck Hui, head of research and consultancy at Credo Real Estate. But ERA Realty key executive officer Eugene Lim said the huge number of homes on the way will have an impact. He said this and a slowing economy will add further downward pressure on rents and prices. The URA data also showed the first slide in prices for a housing segment since the second quarter of 2009, suggesting that the private residential market has peaked or is close to peaking. Private home prices rose 0.2 per cent from the previous quarter, bringing the full-year rise to 5.9 per cent, but semi-detached homes dipped 0.6 per cent. Credo's Mr Ong noted that the fourth quarter is also the first since 2009 to see landed housing prices rising more slowly - 0.1 per cent - than those of non-landed housing at 0.3 per cent. 'This shows that some segments of the landed market are facing stronger price resistance,' he added. Still, landed home prices have risen 80 per cent from a trough in the second quarter of 2009, outperforming the 48 per cent jump for non-landed homes. Experts say the market is likely to turn cautious gradually. Prices will struggle to gain momentum given the recently imposed cooling measures such as the 10 per cent extra stamp duty on foreign buyers, as well as the economic slowdown. Mr Joseph Tan, CBRE's executive director of residential, expects mass market demand to hold up well, though it is unlikely to match last year's, when new private home sales surpassed 16,000. 'We expect the demand for new homes to decline to between 13,000 and 14,000 units and home prices to soften by 5 to 15 per cent, with luxury and prime residential properties on the higher end of the spectrum and mass market homes least affected,' he added. Office rents rose 0.3 per cent in the fourth quarter from 0.9 per cent in the quarter before while prices gained by 1 per cent, lower than the 3.7 per cent rise previously. Prices for industrial space rose 4 per cent, down from 6.9 per cent. See Money Source: The Straits Times