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Resale prices of non-landed homes in CCR and fringe fare better
RESALE prices of non-landed private homes in Core Central Region (CCR) and the city-fringe have been more resilient so far this year compared to those in the suburbs.
Based on the November flash estimates released by SRX Property on Tuesday, its price index for resale non-landed private homes in CCR rose 1.6 per cent from December 2014 to November 2015. Over the same period, the index for Rest of Central Region (RCR) appreciated 2.3 per cent. However, the index for Outside Central Region (OCR) slipped 2.6 per cent over the same period.
OrangeTee's senior manager of research and consultancy, Wong Xian Yang, highlighted that the relatively better performance in the CCR and RCR so far this year has to be seen against the fact that these two regions suffered bigger price drops last year than the OCR. "As prices in these two regions fell more previously, centrally located properties have become more attractive and we may see demand starting to gravitate towards them.
"However, the price recovery in these two regions may not be sustainable due to the big completion numbers for private homes across all three geographical regions next year," said Mr Wong.
Still, prices in OCR can be expected to come under greater pressure going ahead as 55 per cent of the 22,351 private homes slated for completion next year will be located in the suburbs, he added.
On an islandwide basis, rental demand is expected to remain tempered due to the huge completion numbers amid subdued inflow of foreigners. "The weakness in the rental market will likely spill over to prices," Mr Wong said.
Based on SRX's November flash estimates, its overall resale price index of non-landed private homes rose 0.6 per cent in November over October. This contrasts with a 0.6 per cent month-on-month drop in October. SRX Property said there was no revision to the October 2015 price index.
Based on the November flash estimate, SRX Property's overall resale price index for non-landed private homes was down about 1.3 per cent year on year. Against the peak in January 2014, November 2015 prices were down 7.0 per cent.
The price index for CCR rose 3 per cent month on month in November after easing 1.8 per cent in October. In RCR, prices advanced 1.3 per cent last month after falling 0.8 per cent in October. However, in the OCR, SRX's price index retreated 0.8 per cent last month after remaining unchanged in October.
ERA Realty key executive officer Eugene Lim estimates an overall price decline of about 2.5 per cent this year. "Moving forward, we expect the gradual price decrease to continue into 2016, as the high number of completions and policy measures continue to weigh down prices."
SRX Property said an estimated 488 non-landed private homes were resold last month - reflecting a 2.8 per cent drop from the 502 units resold in October 2015.
Year on year, resale volume in November 2015 was 31.2 per cent more than the 372 units resold in November 2014. However, compared to the peak volume of 2,050 units in April 2010, the latest figure is down 76.2 per cent.
ERA's Mr Lim is "quietly optimistic" about the longer-term perspective for the resale private housing market. "Increasingly, we have observed that a greater proportion of buyers are turning to the resale market when looking to purchase a private apartment or condo for owner-occupation. Their reasons for doing so include lower prices and higher bargaining power. Moreover, resale units are comparatively larger than units launched by developers nowadays," Mr Lim noted.
Overall for 2015, ERA expects about 6,000 non-landed private homes to change hands in the resale market, an increase of some 20 per cent over the total volume for 2014.
"Building on this momentum, we should see a better 2016 in terms of transaction volume as the market continues to act rationally," Mr Lim added.
SRX Property said the overall median transaction over X-value (TOX) was zero in November after posting negative S$3,000 in October 2015. Among districts that posted at least 10 resale deals last month, prime District 9, which includes places such as Orchard, Cairnhill and River Valley, posted the worst median TOX, to the tune of negative S$70,000.
The median TOX measures how much people are underpaying or overpaying against the computer-generated estimated value or the so-called X-value.
District 15 - which includes places like Katong and Meyer Road - posted a median TOX of negative S$25,000, while District 16 - which includes the likes of Upper East Coast and Bedok - had the highest median TOX, of positive S$35,000.