According to CB Richard Ellis, demand for new homes in the first quarter of 2010 more than doubled that of the fourth quarter of 2009. Response to new projects launched in the first three months of the year chalked up close to 4,000 homes compared to only 1,860 in the previous quarter, notwithstanding the introduction of another set of property curbs in February 2010.

This showed the resilience of residential demand from both owner-occupiers and investors. Nevertheless, the property measures seemed to be effective in weeding out short term speculators. The February measures came in the wake of 1,480 new homes sold in January alone, nearly 1.5 times the average monthly volume of 620 units in the previous quarter.

In line with its objective of ensuring a more stable and sustainable residential market, the government announced a set of measures on 19 February 2010: a 3.0% stamp duty on residential properties sold within one year bought on/after 20 Feb 2010, and lowering of the loan-to-value limit from 90% to 80%.

Although these measures caught the market off- guard, new home sales in February registered 1,196 units. The brisk pace continued in March and some 1,200–1,400 new homes are expected to be sold.

The strong take-up in the first quarter was anchored on selected new projects with strong locational and product attributes. They included:

1. Altez – 150 units sold out of 280 at the median price of $1,817 psf

2. Cube 8 – 175 units sold out of 177 at the median price of $1,350 psf

3. Holland Residences – 78 units sold out of 83 at the median price of $1,680 psf

4. The Estuary – 520 units sold out of 608 at the median price of $760 psf

5. The Laurels – 212 units sold out of 229 at the median price of $2,800 psf

6. The Vision – 230 units sold out of 295 at $1,100 psf–$1,200 psf

7. 76 @ Shenton – all 202 units sold at $1,600 psf–$2,600 psf

Joseph Tan, Executive Director, Residential said “Most of the new launches in the first quarter were freehold projects located in prime districts 9, 10 and 11”. These include Cube 8, Holland Residences, The Laurels and Waterscape. In Tanjong Pagar, the takeup at Altez and 76 Shenton Way was brisk because of their city locations and composition of small-format apartments (one- and two- bedroom units from 500 sf–800 sf each). The Estuary’s success could be attributed to a strong demand from HDB upgraders as well as the project’s view of Lower Seletar Reservoir and Orchid Country Club Golf Course.

Based on caveats lodged to date, about 33.7% of the buyers in the first quarter of 2010 were HDB addressees, often regarded as HDB upgraders. The proportion of HDB upgraders this current quarter is lower than the 63.7 per cent of HDB upgraders who bought new homes a year ago in the first quarter of 2009, after the lull in 2008.

Tan added, “ Most of the new launches then were mass-market type projects such as Caspian, Double Bay Residences and Mi Casa. In the first quarter of 2010, most of the projects launched were more up-market and are located in the prime districts of Sentosa Cove and in the Downtown Core.” As such, private home owners made up the bulk of the buyers (66.3 per cent) as compared to HDB upgraders. Foreigners bought around 23.5% of the new homes in the first quarter, the top three being Indonesians, Malaysians and PRC Chinese.

On the whole, home prices in the first quarter reflected a small upside of 2%-5% over the fourth quarter of 2009, supported mainly by resale transactions as developers have maintained prices of new launches in the same locations at last quarter’s levels. For example, transactions in The Sail @ Marina Bay and Caribbean At Keppel Bay averaged at $2,213 psf and $1,372 psf respectively, up from the corresponding $2,101 psf and $1,346 psf in the fourth quarter of 2009. In the luxury segment, units in Ardmore Park were sold at $2,982 psf in the first quarter this year compared to $2,936 psf previously.

Developers participated actively in the government land sales (GLS) programme in the first quarter of 2010 to acquire residential sites. A total of three condominium and two executive condominium (EC) sites were successfully sold, with each tender attracting eight to 11 bids.

In the second quarter of 2010, the residential market looks forward to the launch of 99-year leasehold projects at Chestnut Avenue, Dakota Crescent and Lorong Ah Soo and prime freehold projects on the sites of former Parisian, Pin Tjoe Court and Anderson 18.

As demand for new homes is expected to be around 3,000 units, the GLS programme will be a viable source for developers to replenish their land bank. Home prices will rise at a gradual pace, held in check by the government measures and buyers’ prudence in financial management.