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Prices of toniest flats slipping, but they're not exactly a steal yet

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For those coveting Singapore's swankiest homes, prices of some may have come off but they're still far from bargain basement levels.

Singapore

FOR those coveting Singapore's swankiest homes, prices of some may have come off but they're still far from bargain basement levels.

In the posh home segment, prices of new sale or new launches have fallen while resale seems to be resilient.

Also there is quite a lot of price difference within Singapore's core central region (CCR) which include districts 1,2,4,6,7,9,10 and 11 - with district 10 regarded as the cream of the crop.

Median prices on new landed homes on a per sq ft (psf) basis in CCR has been trending down in the past four quarters, to S$2,365 psf in Q2 2020 from Q2 2019's S$2,891 psf, according to Christine Sun, OrangeTee & Tie head of research & consultancy.

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Still Ms Sun said the lower CCR prices in 2020 very much depends on what was launched, and does not exactly mean prices in the luxury segment have dropped across the board.

"Some projects offer star buy units - it doesn't mean the discount is applied across the board," she said.

CCR's average new home prices in 1H 2020 has dropped 12 per cent to S$2,510 psf from S$2,864 psf in 1H 2019, said Wong Siew Ying, PropNex head of research and content.

Going by the URA Property Price Index which includes new and resales, CCR private home prices have risen by 0.4 per cent in 1H 2020 from end-2019 and is now 4.7 per cent below the all-time peak in Q1 2013, said Ms Wong.

"The current economic downturn and Covid-19-induced travel bans would have crimped demand for homes in the CCR by a greater measure than other regions, given CCR properties' higher values and smaller pool of buyers," said Ms Wong.

"In view of the uncertainties ahead, many prospective buyers are also more cautious about committing to a big-ticket home purchase, adopting a wait-and-see approach. However, some of them could be motivated to enter the market at the right price-point," she said.

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To this end, developers - well aware of the challenging conditions - are pricing units sensitively. Such an approach has drawn positive response from buyers, as shown by the good take-up at The M and Kopar at Newton, for example, she said.

The M and Kopar at Newton - both launched earlier this year - are in district 7 and 9 respectively.

Chern Woon Lam, Edmund Tie, senior director, research & consulting, said the fall in CCR prices is due to a mix of the economic climate and the launched products.

"In H1 2019, new sales prices were pushed up by a few projects with higher transacted prices given their freehold tenure and superior location, for example Boulevard 88 and 3 Cuscaden in the Orchard Boulevard area," said Mr Lam. Sales at these two projects in district 10 were recorded at over S$3,300 psf.

Transacted prices for Boulevard 88 in H1 2019 ranged from S$3,301 psf to S$5,125 psf; the latter was for a 562 sq m penthouse on the 28th floor unit which went for an eye-watering S$31 million in June 2019.

Of course, not all the expensive units cost tens of millions. Two units at 3 Cuscaden were sold this year for S$2.6 million and S$1.6 million. The lower priced S$1.6 million was for a 473.6 sq ft-shoebox unit which translated to a princely S$3,446 psf.

"In H1 2020, new launches were priced more competitively, for example The M and Kopar, said Mr Lam. Transaction prices for The M ranged from S$2,127 psf to S$2,937 psf while Kopar was from S$2,083 psf to S$2,531 psf.

OrangeTee's Ms Sun noted that if the 28th floor penthouse unit is taken out of the equation, the median psf price for Boulevard 88 from Q1 2019 to Q2 2020 ranged from S$3,606 to S$3,744.

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Buyers looking for less expensive CCR homes can consider resales which averaged S$2,073 psf in H1 2020, up slightly from S$2,046 psf in H1 2019.

In the first half of this year, CCR new homes achieved an average price of S$2,510 psf, representing a 24 per cent premium over the S$2,025 psf average price for resale units, said PropNex's Ms Wong. The price gap has narrowed from 41 per cent in 1H 2019.

Should CCR buyers take the plunge now or hang on longer for the deteriorating economic conditions to continue pushing prices lower?

Ms Wong: "With the economic uncertainties and pandemic exerting downward pressure on prices in the CCR, this could actually be an opportune time for interested buyers to evaluate properties in Singapore's prime housing districts. Taking a medium- to long-term view, the outlook for the Singapore property market remains positive."

"We do not expect prices to fall substantially, and developers may not have that much headroom to cut prices on account of factors such as firm land cost and rising construction cost," she said.

In addition, the property market has entered the crisis in a more sustainable position after several rounds of cooling measures over the years, she said.

"Hence, we believe it is highly unlikely for CCR prices to plunge as they did during the Global Financial Crisis, when we saw CCR home values fall by more than 25 per cent cumulatively from Q3 2008 to Q2 2009."

On potential CCR buys, Ms Wong suggested the following projects which are marketed by PropNex.

Marina One Residences has seen the average transacted price fall to about S$2,330 psf in recent quarters compared to around S$2,550 psf in the first nine months of 2019. There is also Leedon Green, a freehold development with an average transacted price in 1H 2020 of $2,690 psf and 99-year leasehold Kopar with an average transacted price of $2,287 psf, she said.

Ms Sun is partial to RoyalGreen and Haus on Handy, as well as Kopar.

For those with smaller budgets, there is little to cheer as prices in the more affordable rest of central region (RCR) and outside central region (OCR) have even risen as remote working becomes more prevalent and the decentralisation of economic city centres gains momentum, said Edmund Tie's Mr Lam.

Quarter-on-quarter price change for new non-landed homes in RCR was up 2 per cent in Q2 and 3 per cent higher in OCR. The median psf price unit for RCR in Q2 was S$1,772 vs S$1,737 in Q1; in OCR it was S$1,483 vs S$1,440.

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