About 50 homebuyers walked away from deals in October

Posted by luxuryasiahome on November 18, 2008
But trend not likely to escalate as it was a month when bourses tanked
THE number of private homes returned to developers shot up last month on the back of a sharp dive in confidence due to the stockmarket crash.
Homebuyers returned 50-odd units to developers in October, compared with 10-plus units each in the preceding month and in October last year. The figures were estimated by BT from statistics on developers’ sales released by the Urban Redevelopment Authority (URA) yesterday. The figures exclude executive condos.
October also saw developers launching and selling the lowest number of private homes since URA started making monthly housing sales data available in June last year. Developers sold 112 private homes in October, down about 70 per cent from 376 units in the preceding month and 80 per cent below the 566 units sold in October last year. The 159 private homes developers launched last month was also 79 per cent lower than September and 75 per cent below that in the same year-ago period.
Buyers who returned the 50-plus units last month probably did so before the options were due to be exercised, industry observers reckon. Buyers who walk away from a deal before the option is exercised forfeit a quarter of the 5 per cent option fee, equivalent to 1.25 per cent of the purchase price of the unit.
‘The stock market was at its worst in October. So some buyers may have got jittery and decided it was better to forego 1.25 per cent of the purchase price - that’s $12,500 for a $1 million property purchase - than to be saddled with uncertainty. They worry that property prices may drop much further in the next six months. So it’s a matter of weighing risks, even for people who can afford to take the hit,’ said a seasoned property agent.
Another industry observer said another factor for the forfeitures could be if buyers failed to secure the required quantum of housing loan from banks, which have become more cautious in lending. ‘Some buyers may also have observed developers trimming prices and got cold feet,’ he added.
On a brighter note, he does not expect the number of units returned to developers to keep rising in the months ahead. ‘Anybody who buys now must have done his homework. Things are a lot clearer now.’
Agreeing, DTZ executive director Ong Choon Fah said: ‘October was an exceptional month with so much stockmarket turmoil and fear all around. Hopefully, we won’t get a repeat of this. People will be much more considered when buying homes henceforth and therefore the number of units returned should revert to a more normal situation.’
October saw a total of 14 units returned at Concourse Skyline at Beach Road, 11 units at The Peak @ Balmeg in the Pasir Panjang area and five units each at Silversea at Amber Road, Tresalveo at Marymount Terrace and VIVA at Thomson Road/Suffolk Walk. Nonetheless, all these projects still saw units being sold in October.
CB Richard Ellis (CBRE) said, based on transacted prices, prices have ‘remained fairly stable for the past two months, with due consideration that factors such as floor height, orientation and liveable space affect prices’.
‘However, it is very likely that the persistent thin volume will have a downward effect on prices. The sluggish sales momentum is likely to remain for the rest of the year as macro factors such as the economic recession and retrenchment will erode consumer confidence,’ CBRE’s executive director Li Hiaw Ho added. He predicts Q4 may see sales volume of around 500 units, a level last seen in Q1 2003.
Knight Frank director Nicholas Mak said that homebuying sentiment is expected to weaken in the face of economic and job market uncertainties. ‘Launches are expected to be held back till at least after Chinese New Year 2009,’ he added. The lowest-priced apartment/condo sold in October was a unit at The Linear ($554 psf) while the highest-priced unit was an apartment at Orchard Scotts ($2,407 psf).
Savills Singapore’s Ku Swee Yong noted that despite a weak month, The Lakeshore in Jurong and Hillvista in the Hillview area crossed $1,000 psf. The $2,169 psf of land area achieved at Sandy Island on Sentosa Cove is probably the highest price for a landed home in Singapore, he added.
Around 63 per cent of the 112 units sold in October were in Outside Central Region. However, in terms of the 159 units launched in the month, the lion’s share (46.5 per cent) were in the Core Central Region.
Source : Business Times - 18 Nov 2008