URA Q4 stats show signs of speculative buys

The Urban Redevelopment Authority's (URA) fourth-quarter real estate statistics show evidence of the investment and speculative activity that drove various segments of the Singapore property market last year and led to the latest cooling measures.

Home buyers in the private housing market, for instance, picked up far more homes from developers last year (22,197 units) than in the previous year (15,904 units). However, fewer homes changed hands in the resale market, which covers secondary market deals involving completed properties, last year (12,811 units) than in 2011 (14,046 units).

To deter speculation in residential properties, the government introduced a punitive SSD regime in early 2011, where SSD rates of 16, 12, 8 and 4 per cent were slapped on those who bought private homes on or after Jan 14, 2011, and sold them in the first, second, third or fourth year respectively of purchase.

As for non-residential properties, a disparity in performance of the URA's price and rental indices last year points to speculative demand.

Prices of offices and shops increased in 2012, albeit by a smaller magnitude than in 2011, despite falls in rents.

The URA's All Industrial price index shot up by 25.8 per cent last year, outstripping a 10.1 per cent increase in rentals.

The URA's office price index rose 1.4 per cent while the rental index dipped 1.3 per cent last year. Its shop price index gained 2 per cent while rents slipped 0.3 per cent. The same trend applied to the private housing segment, with the 2.8 per cent gain in the overall private home price index in 2012 outperforming a 2.1 per cent rise in the rental index .

Earlier this month, the government imposed SSD for industrial properties, with the rates set at 15, 10 and 5 per cent on properties bought on or after Jan 12 and sold in the first, second and third year respectively of purchase.

The number of caveats lodged for subsales of strata factory units jumped from 70 in 2011 to 189 last year.

In particular, subsales picked up substantially in the fourth quarter of last year, with 80 caveats, higher than the 64 units in Q3, 29 in Q2 and 16 in the first quarter of last year.

For shops, subsales climbed from 11 deals in 2011 to 45 deals last year. However, for offices, there were only three subsale transactions each in 2011 and 2012.

The strata shops market on the whole (primary and secondary markets) was buoyant in 2012, with 1,295 caveats lodged (amounting to $1.59 billion in transaction value), double the 636 caveats ($0.69 billion) in 2011.

On the 2.7 per cent Q-o-Q drop in the URA index for multiple-user factory space in Q4 last year, after the index rose 10.1 per cent in Q3. New project sales are higher in value than secondary market deals and help to lift the index. In Q3, nearly half of the sales volume was from new projects, whereas in the fourth quarter, the proportion dropped to 35 per cent.

Source: Business Times –26 January 2013