Bright End to the Year for Property Market

The year looks like it is ending with a flourish for the property market, with turnover up and condominium resale prices already at a historic high.

The only weak spot is rentals, which have weakened in the wake of increased supply and job cuts among global firms.

Condo resale prices rose overall to $1,222 per square foot (psf) on average for October and November, according to the Singapore Real Estate Exchange (SRX) yesterday.

This is 5.4 per cent up on the $1,159 psf average recorded during the third quarter this year.

Gains were seen across the island during October and November.

City centre resale prices were 2.8 per cent higher than the average in the third quarter, city fringe condos were up 3.3 per cent and suburban condo values shot up 4.5 per cent.

The overall islandwide price growth of 5.4 per cent was higher than the individual increase in each region because condos in the city centre, which are more expensive per square foot than the rest, made up a bigger percentage of transactions in October and November than in the third quarter, the SRX said.

Resale transaction volumes climbed 6 per cent to 2,483 in October and November, from July and August. However, analysts noted that December is typically a quieter month, given the festive break, so overall fourth-quarter transaction volumes may not show a significant increase.

The rental market appears to be heading in the opposite direction to the resale market.

Overall gross rental yield dropped to a six-year low of 3.77 per cent in the first two months of the fourth quarter, the SRX said, citing a double whammy of strong price gains and weaker rents.

Analysts said the rental outlook is likely to be dim.

Average unit monthly rents dipped from $3.88 psf in the third quarter to $3.84 psf in October and November.

The sharpest drop was in the city fringe, where rents moderated after three straight quarters of growth this year, falling 2.5 per cent to an average of $3.91 psf.

Rents for condos in the rest of the island remained relatively stable relative to the third quarter.

City centre rents averaged $4.67 psf in October and November, little changed from the thirdquarter, while suburban rents were virtually flat at $3.06 psf.

The SRX's report also included, for the first time, data for shoebox units, which are apartments smaller than 50 sq m.

Demand was high for rents, with 1,328 contracts having been signed so far this year, but the number of resale transactions was relatively small at 198 units as of Dec 6.

Average unit monthly rentals for shoebox apartments were $6.65 psf in October and November, slightly higher than $6.61 psf in the third quarter.

Source: The Straits Times –8 December 2012