Condo resale prices end year in neutral

R'ST Research director Ong Kah Seng expects weak leasing demand to prompt owners of suburban condos to lower their prices in a bid to sell their units and at least break even on their investments.
R'ST Research director Ong Kah Seng expects weak leasing demand to prompt owners of suburban condos to lower their prices in a bid to sell their units and at least break even on their investments.PHOTO: JAMIE KOH

After zigzagging for much of the year, resale prices for condominiums and apartments ended last year at about the same place they were 12 months earlier.

Overall prices edged up just 0.1 per cent, according to flash figures released by SRX Property yes- terday.

That there was any increase at all is likely due to the 1.8 per cent price jump for properties in the prime districts that offset falls of 0.9 per cent in the city fringe and 0.4 per cent in outlying districts.

The index inched up 0.4 per cent from November to last month, led by a price increase of 1.2 per cent for properties outside the central region while those in the rest of the central region decreased by 0.5 per cent in value. Prime district property values remained unchanged.

The index for last month was down 7.8 per cent from the recent peak in January 2014.

"Price increases lasted no more than four consecutive months in 2016... before reversing direction in the subsequent months," said Mr Ong Kah Seng, director of R'ST Research. The movement reflects "increasing potential for price stability rather than recovery going forward", he added.

The number of resale units sold last month fell by 21.7 per cent to 484 from the 618 moved in November, according to SRX data.

However, that was still 6.8 per cent higher than the 453 units resold in December 2015.

Overall, sales volumes last month were 76.3 per cent down from the peak in April 2010 when 2,050 units were resold.

R'ST Research expects prices to follow the same up-and-down pattern this year but added that non-landed, completed property values may fall by up to 1 per cent, an estimate tallied against SRX's numbers for last year.

More private condo units will be put up for resale as owners clear the four-year holding period to avoid paying sellers' stamp duty.

Mr Ong said: "For these investors who bought suburban condos and experience weak leasing demand, they may be more willing to cut prices, such that they at least break even - because they will feel it is not worth the efforts to keep devising strategies to attract tenants."

A version of this article appeared in the print edition of The Straits Times on January 11, 2017, with the headline 'Condo resale prices end year in neutral'. Print Edition | Subscribe