'Hungry Ghost' effect?

Analysts expect new home sales to have plunged in August


05:55 AM Sep 14, 2010
by Ephraim Seow

SINGAPORE - Sale of new private homes are likely to have dropped to between 500 and 800 units last month, with developers and potential buyers sidelined during the Hungry Ghosts' Festival.

This is according to analysts who talked to MediaCorp ahead the Urban Redevelopment Authority's (URA) monthly release tomorrow, which is expected to show transactions plunging from the 1,544 units in July.

But with the measures announced late last month to cool the property market, most analysts believe that private home sales for the rest of the year will likely remain at the lower levels.

Ms Chua Chor Hoon, senior director of research at property consultancy DTZ, said: "Last month has been quiet because there were fewer launches. Going forward, we expect private home sales to moderate to, on average, 500 to 600."

"We have also adjusted the total sales for the year to be between 12,000 and 13,000 units, down from the 14,000 to 15,000 units previously expected," she added.

HDB upgraders are expected to bear the brunt of the new measures.

"The new restrictions on the loan-to-value ratio and increased requirement on cash downpayment will hurt the HDB upgraders and those with dual ownership since their pockets may not be as deep," Ms Chua said.

And any increase in home prices would be moderated as well, analysts said.

"We expect the URA price index to increase by not more than 5 per cent in the third quarter and not more than 2 per cent in the fourth quarter. This is about 2 per cent lower than forecast earlier," said Ms Tay Huey Ying, director of research and advisory, Colliers International. Prices could still be on the rise as developers are in no hurry to offload units and have to factor in the high land acquisition costs, she said.

Meanwhile, cash-over-valuation pricing of HDB resale flats is expected to take a beating following the new measures. Sellers are now more willing to negotiate lower cash premiums, fearing more cooling measures even as the pool of buyers diminishes.

"The cash over valuation in resale market deals is lowering with decreasing demand from buyers," noted Ms Chua.

Source: http://www.todayonline.com