Where to buy and when to buy? BT seminar looks into opportunities in a volatile property market

THOSE on the hunt for residential property that gives “better bang for the buck”, particularly at today’s price levels in the Singapore market, should cast their eyes to the prime Core Central Region (CCR). 

This was one of the tips dished out at a seminar organised by The Business Times on Saturday (Feb 18), titled Opportunities Amidst Volatility. 

With prices of new CCR homes now averaging S$2,900 to S$3,000 per square foot (psf),  the price gap between private homes in the prime areas and those in other regions has narrowed significantly, said PropNex Realty chief executive officer Ismail Gafoor. In the city fringe, or Rest of Central Region (RCR), transactions are currently averaging S$2,560 psf, while suburban private housing in the Outside Central Region (OCR) now stands at S$1,953 psf on average.

Gafoor was speaking on a panel at the seminar along with Edmund Tie chief executive Desmond Sim, and Qian Wenlan, a professor of finance and real estate and Ng Teng Fong chair professor in real estate at NUS Business School. BT senior correspondent Leslie Yee moderated the discussion.

The BT event saw a total of 126 registrations from all backgrounds and ages. Up for discussion were topics that included the impact of megatrends on Singapore’s property prices; how the residential sector compares with others in terms of buying opportunities; and where homebuyers and investors can find relative value in the residential market’s various regions. 

Gafoor also noted that the CCR region is where several projects will be approaching a critical sales deadline this year, and may start to give out deal sweeteners. Developers face a payment of 35 per cent Additional Buyer Stamp Duty (ABSD) if they do not sell all the units in their project within 5 years of the land purchase, although extensions were granted during the pandemic.

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On whether residential prices would continue to defy gravity, panellists said they did not see a correction on the immediate horizon even with interest rates and financing costs rising.

Edmund Tie’s Sim noted that interest rates, while on the rise, were “normalising” from an extended period of ultra-low rates. NUS’ Prof Qian added that with the residential rental market still “doing very well”, owners are not incentivised to rush to sell, or to lower prices to sell.

Prof Qian noted however that the higher Buyer’s Stamp Duty announced in the Singapore Budget last week would make the average new launch more expensive, and add to cost that could affect investment returns.

On million-dollar HDB resale flats, Gafoor pointed out that while these made up less than 1.5 per cent of the market, he expected the numbers to rise. Prices of new build-to-order (BTO) flats sold by the Housing and Development Board have moved up to the S$750,000-S$800,000 region. For sellers of these flats, the breakeven cost would be close to S$1 million, he said.

Questions came in thick and fast during the discussion, from the risks of buying newly launched homes to whether it is likely for the government to roll out a capital gains tax. Timing the market also came up for discussion – the answer being that this was too risky a move for a purchase that incurs significant transaction costs and in a market that does not exhibit any specific cyclical changes. 

The seminar was BT’s first fully physical one post-pandemic, and the first on the property market.