Homes worth above $1.5 million cut bigger slice of 2009 second quarter deals

An analysis of caveats shows that in the second quarter of this year, enhanced view in the private residential section has filtered from the mass-market to the higher levels.

During the year’s second quarter, the proportion of caveats for private housing dealings above $1.5 million was greater than the year’s first quarter.

A DTZ study presents that 22% of transactions in the second quarter were for deals over $1.5 million, as compared to only 10% in the first quarter.

In addition, the amount of transactions in the $1,500 to 1,999 per sq ft price bracket grew more than 10 times, being 34 units in the first quarter to 369 units in the second quarter. The amount of deals for units amounting $2,000 per sq ft or more also increased from only 10 in the first quarter to 67 in the second quarter.

A quarter of caveats lodged in the second quarter were for properties in the prime districts 9, 10 and 11, an increase from 14% in the first quarter. This is another indication of an activity growing to the higher end of the market.

Home buyers with private addresses totalled for 56% of private home buys in the second quarter, an increase from 44% in the first quarter. DTZ said that this shows a spillover of purchasing from the mass market to the higher tiers.

In contrast, the share of caveats lodged for private home purchases by HDB upgraders dropped off from 56% in the first quarter to 44% in the second quarter.

Chua Chor Hoon, head of DTZ South-east Asia, said: “HDB upgraders have been able to participate in the current home buying wave due partly to the wealth effect brought about by rising HDB resale prices”.

“As well, wages went up in the past few years prior to the stagnation and wage cuts seen last year and this year. As a result, prices of entry-level private condos are generally still quite affordable for HDB upgraders”.

“But if developers keep on increasing prices, mass-market private condos will become less affordable again to HDB upgraders”.

The analysis of DTZ indicates that 75% of the whole private housing transactions including buyers with HDB addresses were below or at $1 million in the second quarter, a decrease from 87% in the first quarter.

In addition, 37% of the buyers with HDB addresses acquired properties in the $600,001 to 800,000 price bracket during the second quarter. As compared to that, 60% of the buyers with private addresses bought units pricing more than $1 million.

DTZ discovered that home buyers with private addresses bought big and costly homes than buyers with HDB addresses, which bought smaller homes.

It stated that 77% of buys regarding HDHB upgraders were for homes capable to 1,400 sq ft, as compared with 52% of dealings by buyers with private addresses in the second quarter.