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Slower property market to be expected after a stellar 2012

AFTER last year’s stellar run-up in the property sector, a slower 2013 can be expected, a new report predicts.

Despite another round of tightening from the Government last October, home prices and volumes here continue to be strong, noted Credit Suisse analysts Yvonne Voon and Chok Sing Ping in the report released yesterday.

But with prices steadily rising in the mass market and Housing Board segments, the risk of new measures still persists, they added.

However, prices are likely to remain flattish this year, supported by low vacancy rates for rental properties and strong affordability, the report said.

Vacancy rates remain below the long-term historical average of 6.9 per cent while low unemployment should help keep the finances of households healthy.

“(However), we expect a further 5 to 10 per cent downside risk for the prime segment due to vacancy risks, given the oncoming supply and unsold units versus weak rental demand.

“Meanwhile, we expect mass market prices to be slightly more resilient, supported by a relatively affordable price tag, which seems to be the sweet spot for upgraders and investment demand,” the report added.

Sales volumes are also likely to slow this year as the number of units in the confirmed list of the Government Land Sales (GLS) programme for the first half of this year has dipped compared with the GLS in 2011.

Developers are also likely to be less aggressive this year, Ms Voon and Ms Chok said. This is because developers such as CapitaLand and Keppel Land have won bids in the past six months.

“(Therefore) we believe that there will be less urgency for them to bid for GLS sites, although we maintain our stance that attractive sites such as Alexandra View, Mount Sophia and Prince Charles Crescent are still likely to see strong bids.”

They noted share prices of Singapore real estate investment trusts (S-Reits) have also been boosted due to increased investor demand for yields.

Total returns for such Reits are expected to be in the “mid-teens” this year, the report added.

“The weighted-average yield for S-Reits is around 5.5 per cent, which implies that a further yield compression of 50 basis points should easily translate into share price appreciation of about 10 per cent,” it said.

The added kicker of the appreciation of the Singdollar should offer investors a total return in the teens.

(Source: The Straits Times)

 
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Posted by on January 5, 2013 in General

 

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Private home sales predicted to drop in 2013?

Image The number of private home sales in Singapore could drop by more than 20 percent in 2013 after “spectacular” increases this year.

David Neubronner, Head of Residential Project Sales for Jones Lang LaSalle (JLL), issued the warning this week, suggesting that the number of sales this year, which is expected to reach 22,000 units, will correct to “more healthy levels of about 16,000 units” in a worst-case scenario.

In an exclusive interview with The PropertyGuru, he said: “Put in perspective the jump this year, from 15,800 in 2011 to probably 22,000 by the end 2012, has been spectacular. We believe this is not sustainable moving forward and should correct next year.”

“In the worst scenario, we estimate the market to correct to the healthy levels of about 16,000 units which were achieved in 2010 and 2011. This is taking into account the anticipated economic slowdown in 2013, clampdown on residency and employment of foreigners.”

Neubronner is also not ruling out a further wave of government cooling measures. He said: “The possibility is always there as long as the buying continues. Based on the recent robust sales volumes and concerns of market foaming, there is always the possibility of another round of measures to take the steam out of the market.”

Neubronner predicts that landed property sales will remain resilient given the limited supply and perennial demand, along with the general aspiration of Singaporeans to upgrade to a landed property. The luxury segment has seen sales volume and values declining over the past year and, according to Neubronner, should bottom out any time soon.

“We anticipate a recovery next year given the values and opportunity on offer,” he added.

The mass and middle market segments are expected to see most of the correcting in 2013, he said, adding that these sectors have been running up rapidly over the past year.

Neubronner also expects the proportion of foreign buyers, which now stands at roughly 20 percent, to stabilise. He said: “Singapore will continue to attract foreign buying interest for a million reasons and we believe the series of measures introduced over the past years will more likely subdue the Singaporeans appetite than the foreigners.”

Neubronner concluded by saying: “Although sales volume will decline, we expect prices to stabilise next year. The fundamentals, like a stable economy with high employment, low interest rates, a robust leasing market in the suburban areas and the overall bullish sentiments, are still strong and we do not see these changing in 2013.”

(Source: Andrew Batt, International Group Editor of PropertyGuru)

 
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Posted by on November 26, 2012 in General

 

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