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CCR leads charge in condo price surge in Q4
CONDO and private apartment prices in the prime areas outperformed their peers in the rest of the island in terms of prices in the fourth quarter of 2017.
The Urban Redevelopment Authority's (URA's) Q4 2017 flash estimates data showed that prices of non-landed private homes in the Core Central Region (CCR) climbed 1.6 per cent in Q4 over the preceding quarter.
This was a steeper gain than the quarter-on-quarter price increases of 0.2 per cent for the city fringe or Rest of Central Region (RCR) and 0.6 per cent in the suburbs or Outside Central Region (OCR).
Colliers International's analysis of caveats data shows that projects that contributed to the price growth in the CCR during the fourth quarter included mainly ongoing developer launches such as Martin Modern, Gramercy Park and Sophia Hills - which saw median price gains of 8.3 per cent, 4.0 per cent and 1.8 per cent quarter on quarter to S$2,358 per square foot, S$2,912 psf and S$2,038 psf respectively.
"In the luxury segment, Ardmore Park, Ardmore II and Ardmore Three also recorded median price increases of 3.1-6.3 per cent in Q4 compared with Q3," said Tricia Song, head of research for Singapore at Colliers International.
Cushman and Wakefield research director Christine Li said that the 1.6 per cent rise in non-landed private home prices in the CCR in Q4 2017 was the strongest quarterly increase for the segment in 6-1/2 years since Q2 2011.
The Q4 2017 increase was much steeper than the 0.1 per cent increase in the previous quarter. In contrast, prices in RCR and OCR appreciated at a slower pace in Q4 than they did in the previous quarter.
Ms Song of Colliers said: "The HDB resale price index still continued to fall in the fourth quarter, which means that private apartment and condo prices in the prime areas will do better than mass-market properties because there's no upgrader push." Typically, demand for mass-market condos is driven by buyers upgrading from public housing or HDB (Housing and Development Board) flats.
Ms Li said: "More discerning buyers and investors are finding value in the CCR segment, given the narrowing price gap between the luxury versus the mid-tier and mass-market segments, which gave developers and sellers more pricing power."
Agreeing, JLL national director Ong Teck Hui observed that compared to its earlier peak in 2008, CCR prices in Q4 2017 are lower by 2.5 per cent, while RCR and OCR prices are higher by 5.4 per cent and 34 per cent respectively. "In view of this, CCR properties appear under-priced and relatively good value to some investors." However due to the ABSD (additional buyer's stamp duty), investments in the prime districts remain selective, he added.
Among the high-end projects expected to be released by developers in the CCR this year is New Futura in the Leonie Hill area. Word on the street is that its developer, City Developments, may be eyeing an indicative price of about S$3,500-4,000 psf, which would be a high for the locale.
Going by the flash estimate released on Tuesday, URA's overall private home price index rose 0.7 per cent quarter on quarter in the fourth quarter - identical to the increase in Q3 2017. For the whole of 2017, the index appreciated one per cent - contrasting with the 3.1 per cent decline in 2016. This marks the first full-year increase in the benchmark index since 2013 and confirms that the price recovery in the private housing market is on a firm footing, say property consultants.
Last year's gains in private home prices were supported by higher sales volumes of private homes in both the primary and secondary markets. This was sparked by an improvement in sentiment after the government tweaked the seller's stamp duty (SSD) in March last year and further fuelled by strong land bids by land-starved developers following the strong home sales.
Property consultants expect the index to continue heading north this year, but their forecasts vary widely, from a modest 1 to 2 per cent rise predicted by ERA Realty Network to a 12 to 15 per cent gain forecasted by Savills Singapore research head Alan Cheong. "This will be supported by upward cost-push factors namely the increase in land prices; and continued strong private housing demand.
"Even if new private homes sales by developers fail to live up to expectations - because of a paucity in new project launches or affordability issues for home buyers, for instance - developers can still wait it out for a year or two. For projects to be developed on sites that were bought last year, the five-year deadline to finish building and selling the project is not coming up any time soon.
"If developers who launch projects in 2018 were to get stuck after selling say the initial 30 per cent of units, they can afford to hold on for some time. This is because their break-even costs would be lower than for projects that will be launched next year on higher-priced land." So developers of the earlier batch of projects can hope to ride on higher prices next year, goes the logic.
Lee Nai Jia, research head at Edmund Tie & Co, who is is predicting a 4 to 8 per cent increase in URA's private home price index this year, said: "The caution against over-exuberance sounded by the government may temper the increase in prices."