Recent data from the Urban Redevelopment Authority (URA) has shown that more home buyers are drawn to the private resale market than new homes.
New home sales or developer sales fell 17 percent in Q2 2012 to just 5,402 units from 6,526 in Q1.
Last quarter, new home sales accounted for just 57 percent of total sales as compared to 71 percent in Q1. At the same time, sales of uncompleted homes dropped seven percentage points to 87 percent in Q2 from 94 percent previously.
On the other hand, resale home sales rose 58 percent to hit 3,487 in Q2 and accounted for 37 percent of total sales, an improvement from 24 percent in Q1.
The shift in focus from new to resale homes could be attributed to a number of factors, such as price, size and location.
Png Poh Soon, Head of Research at Knight Frank Singapore, said that the rise in demand for resale homes was buoyed by “fast rising prices of new sale uncompleted properties across the island”.
As new launches set price benchmarks, home buyers choose to purchase resale homes that offer more location choices, readiness for immediate occupation and better value for money, noted Png.
Even with similar location, tenure period and size, resale homes less than five years old “generally command lower prices compared to new sale properties (in terms of dollar psf)”.
Png said that the average price premium ($psf) this year was around 10 percent. For instance, new homes ranging from 100 to 150 sq m in District 16 were sold at a four percent premium compared to resale homes less than five years old. In District 2, new homes between 50 to 100 sq m changed hands at a 20 percent premium compared to resale properties less than five years old.
Another factor to consider is size as developers usually build smaller units in new projects. Hence, families that need more space opt for resale homes that offer bigger sized units but at lower prices, Png noted.
In 1H2012, properties transacted in the resale market had an average size of 129 sq m as compared to 81 sq m for new homes.
Moreover, many buyers tend to go for older resale properties and those located in prime areas. The Core Central Region (CCR) is especially popular due to the narrowing price gap between mass market new launches and resale luxury homes.
Source: PropertyGuru