Sharp rise in Q2 private home purchases

Here's a possible reason why the authorities are not inclined to remove any property cooling measures just yet: There was an across-the-board increase in caveats lodged for private home purchases in the second quarter compared to the previous quarter.

DTZ's analysis of URA Realis caveats database shows a 37.1% quarter-on-quarter increase in the total number of private homes transacted to 3,369 units in Q2.

A segmental breakdown showed that the number of units picked up in the resale market climbed nearly 41% or 386 units to 1,328 units in Q2 from 942 units in Q1 - ending three consecutive quarters of decline.

New sales by developers too rose by 511 units or 36.8% to 1,898 units. In the subsale market, 143 units changed hands in Q2, up 11.7% from Q1.

Across buyer segments, too, there were increases. Singaporeans, PRs and foreigners all bought more homes in Q2 than they did in Q1.

Purchases by Singaporeans rose 45% quarter-on-quarter to 2,491 units in Q2. The number of private homes picked up by Singapore PR climbed 24% to 574 units, while purchases by non-PR foreigners rose 2% to 260 units.

Those with HDB addresses bought 1,629 units in Q2, up 41.3% from Q1. The number of private home acquired by those with private addresses climbed 33.4% to 1,740 units.

Despite the recovery in Q2, the 5,826 total private homes sold in the first-half of this year is not even half the 13,651 units transacted in the first-half last year - reflecting the dent on transactions created by the Total Debt Servicing Ratio (TDSR) framework since its introduction in late-June 2013, notes Lee Lay Keng, regional head (SEA), research at DTZ.

Still the pick-up in the Q2 caveats would give the policy makers a reason to pause and reflect, amid calls by developers and other parties urging the authorities to start rolling back cooling measures such as the ABSD and SSD, she added.

Most industry watchers accept that TDSR is here to stay for the long term. 

"The reason caveats have recovered in Q2," said Savills Singapore research head Allan Cheong, "is that demand is extremely price elastic or price sensitive. Even a slight price decline would lure many potential buyers back to the market".

"In 2012 and 2013, the market was fixated with new property launches. In 2014, the genuine upgraders and even investors who are not overwrought by new-fangled small-format homes have started to look at the resale market where more habitable, larger apartments are to be found, and they have started to plunge into the market.

"And the sellers of such properties being individuals, unlike developers, have little bargaining power and acceded to the buyer's price offer. Hence, prices in the resale market have gone down."

DTZ's Ms Lee said the strong new home sales in Q2 was amid an increase in launches by developers.

DTZ's caveats analysis also showed that because Singaporeans' share of private home purchases rose at a faster clip in Q2 compared with more modest increases in buying by PRs and foreigners, the proportion of units bought by Singaporeans rose four percentage points quarter-on-quarter to 74%.

Conversely, PRs saw a two percentage point retreat in their share to 17% in Q2. Foreigners too poised a three percentage point fall in their share to 8%.

Another finding is that 58% of private homes picked up by Singaporeans in Q2 were new sales by developers. Among foreigners, the figure was 62%. For PRs, however, it was roughly equal split of the source of units between new sales and resales. "It appears that a higher proportion of PRs are buying for owner occupation and hence want a completed property they can move into immediately," suggests Ms Lee.
 

Info source: BT

 Our thoughts after reading the BT report: 

1. The rebound in private home sales in Q2 is kinda expected given the dismal sales figures in Q1. But the Q2 figures is still the second lowest since Q2'2009. 

2. Even professional property watcher had acknowledged that apartments in the resale market are more habitable compared with new launches over the past 2 years by virtue of their larger sizes. This makes us wonder if "less than 400sqft" for one-bedroom apartment is really the norm going forward for home dwellers or will buyers eventually wise up to the fact that such size is really too small to be considered habitable?

3. The percentage of Singaporean buyers have risen while those of PRs and foreigners have correspondingly fallen. And for purchases from PRs, which constitutes the second largest proportion of overall home purchases, about half of these are supposedly bought for own stay. Maybe this should appease (at least a little) them chest-thumping locals that have been harping about foreigners coming into Singapore to speculate on our private properties, thereby jacking up prices and making such homes unaffordable to Singaporeans? You are back to competing with your fellow countrymen more and more...