Property agents say more private homes on sale amid downturn

Posted by luxuryasiahome on December 9, 2008
Property agents said there’s been an eight per cent jump in the number of private homes being put up for sale recently compared to previous two quarters.
HSR Property Consultants said about half of the sellers have bought units under the Deferred Payment Scheme.
The scheme which was scrapped last October allowed homebuyers to delay payments on new property until it is completed.
Eric Cheng, executive director, HSR Property Consultants, said: “They are afraid that the current loans may not sustain the current price which they bought. There’s also concern that the banks may not want to loan them at least an 80 per cent loan. So they are afraid they have to top up more cash.”
But calculations show that these sellers will still make marginal profits or break even if they cash in on their properties now.
Agents at ERA agree that concerns over the fallout from the Deferred Payment Scheme are legitimate but over-rated.
That’s because many investors would have already sold their units when prices peaked towards the end of last year.
Homebuyers are also unlikely to forfeit deposits on new units as they are legally bound to buy them.
However, there is no data available on the number of transactions sealed under the Deferred Payment Scheme.
Agents expect the market to hold up without heading to a fire sale situation where assets go at 20 to 30 per cent below valuation.
Eugene Lim, associate director, ERA Asia Pacific, said: “There are cases of fire sales but they are confined to sellers who generally need to raise cash fast. For example, they may be running a business and run into some cashflow problems.”
Despite the negative sentiment, market players said there’s still demand for properties especially those that are realistically priced. These are sold at between three and five per cent below market value.
Source : Channel NewsAsia - 9 Dec 2008