Who said there are no affordable private homes in Singapore?

By Romesh Navaratnarajah:Prices of several private property projects launched recently in the Outside Central Region (OCR) have been higher than average, with many such units being sold for more than S$1,000 psf - a new record. Amidst this growing trend, more home buyers are now on the lookout for affordable mass market units in Singapore's suburbs.

With this in mind, The PropertyGuru decided to undertake a detailed study of the most affordable private homes on the market for the month of March 2012, using data from the Urban Redevelopment Authority (URA).

Launched last month, Ripple Bay condo in Pasir Ris and the Palm Isles development at Flora Drive saw attractive prices and good take-up of units. Joining them as the top 5 most affordable private homes currently are Parc Vera, Riversound Residence and Parc Rosewood, all located in the OCR.

Comprising of 679 units, Ripple Bay saw an initial launch of 386 homes and has seen 84 percent or 326 units sold to date. The lowest price recorded was an affordable S$645 psf, although prices went up to a high of S$1,115 psf for the priciest homes. Units at the development are going for a median price of S$883 psf.   

Over at Palm Isles, 102 of the total 297 units released were snapped up by buyers at a median price of S$860 psf, but the lowest price for a unit sold was S$672 psf while the highest was S$1,035 psf.

In addition, Parc Rosewood at Rosewood Drive which offers a total of 689 dwelling units saw 626 homes released and a 97 percent take-up rate thanks to prices that went down to a low of S$707 psf. On the other hand, the priciest unit was sold for S$1,115 psf while the median price was at S$1,038 psf.

Meanwhile, the 590-unit Riversound Residence at Sengkang released all its units and recorded a median sale price of S$880 psf, but the lowest price was S$650 psf while unit prices peaked at S$1,144 psf. So far, 310 homes have been sold.

Parc Vera in Hougang also released all its 452 units, of which 287 were sold at a median price of S$834 psf. The lowest price came to S$618 psf against the highest at S$924 psf.

Other projects that also recorded attractive prices were The Minton, Terrasse, Eight Courtyards, Suites 28, The Nautical and Canberra Residences, which have all sold around 90 percent of their units to date.  

According to Mohamed Ismail, Chief Executive Officer of PropNex Realty, the trend of projects with median prices of below S$900 psf may be attributed to the fact that they are "occupying land sites that were bidded much lower last year by the developer and thus these can be transacted at a lower breakeven price".  

Despite the lower pricing, developers can still earn "a reasonable profit of 20 percent or thereabouts," he noted.

While many of these launches are prime developments, developers apply "their own marketing strategies, either to price their development attractively, dispose most of the units and move on to another project or price their project relatively higher and carry the stock over a period of time. Of course, the second is less favoured in an uncertain market," reckons Ismail.

However, he highlighted that developers are not pushing down prices of new launches because of subdued demand and suggested that "it is more likely due to greater options that are available to the consumers and many projects being launched at the same time".  

Ismail said that the trend does not show a new drop in property prices, as the land bids last year were healthy at around S$500 psf ppr and predicted that "mass market property will be priced at S$950 to S$1,000 psf".

At the same time, he does not expect any new cooling measures in the near future, "as the surge in recent transactions are mainly from HDB upgraders and investors with mid and long term perspectives".

He believes that the current measures are sufficient "as speculators and short-term investors are entirely eradicated with the introduction of Seller's Stamp Duty and the Additional Buyer's Stamp Duty. Moving ahead, the private property market will stabilise especially in the mass market segment".

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