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PROPERTY: Muted market gives buyers more bargaining power

The Straits Times March 23, 2008

Prices aren’t tumbling but it’s a good time to get a unit at a reasonable price, say experts

IT IS no secret that the residential property market is in a lacklustre mood.

With many buyers and sellers having scurried to the sidelines as the United States sub-prime woes brought about an uncertain stock market, new home sales slipped to a nine-month low last month.

For those looking to buy a home, the question is whether to buy now or later.

As fire sales have yet to hit the market and prices largely appear to be holding steady, it may not yet be a time when bargains abound everywhere.

But property experts say this may be the best time to bargain for a reasonable deal if you have something in mind.

It is a time when sellers – be it developers selling their new developments or individuals selling their properties in the resale market – are more flexible and buyers have more bargaining power, they say.

Generally, developers are still loath to lower their prices. So a good bet now is likely to be the resale market, where sellers can be more flexible, depending on their reasons for wishing to sell their property.

Completed properties also have the advantage of generating an immediate rental yield, or allowing buyers to move in any time they like, consultants say.

‘Right now, bargain-hunting may take place in the secondary market,’ says Mr Donald Han, Cushman & Wakefield’s managing director.

Some sellers may be looking to get out of the property market because they either cannot or do not wish to hold on to the asset on hand, he adds.

There are certainly desperate sellers out there, but it is not as though they are all ready to sell at a major discount or take a significant loss, says a property investor who declined to be named.

Last month, only 185 new homes were sold, down from 328 in January.

If the current standstill in the market continues, some small developers may start to lower their prices, say property consultants.

And if this happens, it will affect the entire market.

Home prices could fall, but by then, other buyers may beat potential buyers to the properties that they like.

This is why some property consultants say it is really an individual’s reading of the market on when to buy.

This is particularly so for those with a specific unit or a small project in mind, or those seeking unusual products such as suburban condominium units with pools.

The freehold 39-unit Ambrosia in Telok Kurau, for example, offers units with swimming pools, which is not common in small projects.

Its nine penthouses and two ground-floor units come with private pools and these have attracted fairly strong interest.

About 30 per cent of the five-storey development has been sold at an average price of $950 per sq ft (psf), says property consultancy Knight Frank, which is marketing the project.

‘Last year, valuation was trying to keep up with transacted prices,’ says Mr Han. ‘Now, transacted prices are keeping up with valuations.’ Mr Eric Cheng, executive director of HSR property group, says: ‘In today’s market, you can find cheap buys.’

But not all units are cheap, even if the sellers are willing to offload their homes without any profit, he adds.

For instance, some sellers at the 99-year leasehold The Rochester in Buona Vista may be keen to sell at around $1,200 psf, which could be the price they bought at last year.

But the project was launched at 2007 prices, at a time when the market was booming, he said, so they are not a real bargain.

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