Average price of luxury private homes drops 2% in 3Q11

Prices of high-end and super-luxury homes slipped in response to a slowdown in luxury home sales. The average unit price for non-landed high-end private homes dipped 2% quarter-on-quarter from S$2,286 per sq ft in Q2/2011 to S$2,243 per sq ft in Q3/2011.

Similarly, the average super-luxury residential price slipped marginally by 0.4% quarter-on-quarter from S$3,681 per sq ft in Q2/2011 to S$3,667 per sq ft in Q3/2011. Surprisingly, the most expensive non-landed private home by square footage was transacted in this quarter – a unit at The Marq on Paterson Hill sold for S$6,394 per sq ft in August 2011.

As of Q3/2011, high-end home prices decreased by 0.7%, while super-luxury home prices increased 8.4% from the beginning of the year. As a result, price gaps between the current and previous price peaks in Q4/2007 narrowed further, with high-end and super-luxury home prices being just 6.9% and 0.4% from their peak levels respectively.

According to the URA’s record of caveats, prices of non-landed mid-tier private homes dipped marginally by 1.4% to S$1,193 per sq ft in Q3 from S$1,210 per sq ft in Q2/2011. Bucking the trend is the mass-market segment which saw non-landed prices escalating by 2% from S$913 per sq ft in Q2/2011 to S$932 per sq ft in Q3/2011. The price increase was observed across all mass-market segments – new sales (2%), subsales (5%) and resales (2%).

Outlook

The uncertainty stemming from the worsening global economy may heighten caution among home buyers in the near term. The outlook for the luxury home segment remains clouded, while mass-market home buying may slow down due to the increasing supply and worsening global economy. The traditionally slower sales during the year-end holidays may further compound the dampening effects on Q4’s home demand.

The repercussions of the softening market could see overall sales sliding by about 20% quarter-on-quarter in Q4, while monthly sales, excluding ECs, in the primary market could stabilise between 1,000 and 1,200 units.

As more than 10,000 new homes (excluding ECs) have already been transacted from January to August, 2011 could end with a total sales volume of between 14,500 and 15,500 units, coming just below last year’s record of 16,292 units.

Prices of new mass-market homes may continue to edge-up by about 1% to 2% quarter-on-quarter in Q4 as a result of developers’ strong holding power, while the resale market may see some weakness, with a price fall of 2% to 3%. High-end and mid-tier homes could also see a further price correction of between 2% and 4%