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Real estate market quiet as uncertainty looms in US

Buyers might want to delay their property purchases till a clearer picture emerges, say experts

THE Singapore property market has turned somewhat jittery in the face of growing fears about a recession in the United States.

Analysts suggest that unless buyers need a home to live in, they might want to delay any purchases until a clearer picture emerges.

The days when speculators could make quick, easy profits are almost certainly over, they say.

Thus, consultants do not expect much sales activity in the lead-up to Chinese New Year, especially since few launches have been scheduled.

Indeed, market players might hold off till the Budget is released later next month, so they can gauge the Government’s stance, said one consultant, who added: ‘If I were a buyer, I’d wait before committing myself to a property investment.’

Apart from worries that a US recession might hurt growth in Singapore, some also believe last year’s price spurt in high-end homes was overdone.

‘If your goal is to flip the property before completion, you should stay out of the market,’ said Savills Residential director Ku Swee Yong. Such buyers could end up having to finance their purchases long term, he warned.

He noted that Singapore’s property market is stable but said there is a risk that prices could fall. If US subprime woes force mortgage insurers to write off bad insurance, this could trigger construction industry layoffs, as well as defaults on consumer credit-card rollover debt and car loans, said Mr Ku.

Some sellers appear to have lowered their expectations, particularly for high-end homes. But their asking levels are likely to remain above the purchase prices, analysts note.

In a recent classified advertisement in The Straits Times, high-floor units at Sky@eleven, a condominium off Thomson Road, were going for $1,250 per sq ft (psf). That falls short of earlier asking prices of $1,300 psf to $1,400 psf, but tops prices achieved at the launch early last year. Then, the highest price garnered was $1,200 psf, with the average at $975 psf.

‘The opportunities are there, but it is all a matter of timing,’ said a consultant. ‘In the short term, people who don’t have a lot of money to play with should think twice.’

‘Buyers should take a longer-term view and buy when they come across properties priced at acceptable levels,’ said Mr Nicholas Mak, Knight Frank’s director of research and consultancy. ‘Developers are unlikely to cut prices, which should provide support for the market.’

Buyers who plan to live in their new homes, especially if they’re using collective sale gains, have less to worry about, though choices in the primary market might be limited. ‘Developers are waiting for the tempest in the stock market to pass before launching their properties,’ said Mr Mak.

There are favourable deals in the sub-sale and resale market, and the mass and landed markets remain laggards, consultants say. Recent caveats lodged show there are favourable landed buys in suburban spots.

One seasoned property investor said he would continue to scout for bargains but would be more selective.

‘The market is nervous but it’s not doomsday. There are still good buying opportunities,’ he said, adding that he scooped up a few cheap buys just after Sars. ‘Do your homework and narrow your search to, for example, areas with a growth story.’

Where new launches are concerned, two condos have started their staff previews. Martin Place Residences in Kim Yam Road is priced at $1,800 psf to $2,300 psf. Over in Bedok Reservoir, Waterfront Waves is priced at $750 psf to $800 psf.

 

Source: The Straits Times 20 Jan 08

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