Amid the overall soft property market conditions, savvy private home buyers looking for attractive deals zoomed in on the Core Central Region (CCR) last year.
Government data released on Thursday showed the region was 2016’s outperformer in terms of percentage increase in transaction volumes, which in turn provided some ballast for prices in the region.
The total number of private homes sold in CCR through both primary and secondary markets surged 48.7 per cent to 2,764 units in 2016 over the preceding year.
This is a faster pace of increase compared with the 27.2 per cent rise in transaction volume in the city fringe or Rest of Central Region (RCR) to 4,868 units and a 3.7 per cent increase in transactions in the suburbs or Outside Central Region (OCR) to 8,746 units last year.
The sparkling increase in CCR sales volumes was accompanied by greater price resilience in the region. URA’s price index for non-landed homes in CCR posted a relatively modest drop of 1.2 per cent in 2016 – compared with the price contractions of 2.8 per cent in RCR and 3.4 per cent in OCR.
There has been heightened interest in the prime market with both local and foreign investors trying to suss out attractive deals.
Buyers took the opportunity to enter the market as many sellers and developers are giving close to 20 per cent discount from the launch or peak prices in CCR.
The attractive deferred payment schemes that some developers have rolled out in their delicensed projects since last year to drum up sales and avoid paying penalties to the state if they do not meet looming deadlines to finish selling their projects have also helped boost volumes.
The average price of new homes in CCR declined to S$2.4 million in 2016 from S$2.5 million in 2014 – a clear indication that the market is being driven by quantum play.
What is expected to prevent a drastic price drop this year is a steady increase in transaction volumes in both primary and secondary markets – supported by the perception that the market is nearing its bottom.
Compared to the residential sales market, the leasing market is behind the curve in recovery. Its downtrend will continue in 2017 with stability expected only in 2018. Difficult business conditions that have resulted in headcount reductions among expats, cuts in housing budgets and policy restrictions in the intake of foreign labour will continue to weigh on leasing demand.