Jones Lang LaSalle warns would be condo buyers rates may rise

Continuing low financing environment boosts sales of private housing, according to a report by Jones Lang Lasalle.

URA monthly sales volume for private residential units (excluding executive condominiums (ECs)) increased by 29% m-o-m in April 2011 to 1,788 units. After seeing the sales volume decline in March, activity in the Outside Central Region (OCR) picked up this month and was the driving force behind the increase in overall sales volume. The take-up rate reached 87% overall and was particularly strong in the Rest of Central Region (RCR) where take-up was recorded at 120%.

Sales volume also continued to increase in the Core Central Region (CCR), with 301 units sold in April, an increase of 14% m-o-m. The number of units launched also saw an increase, up by 64% m-o-m to 387 units. The only new launch in the CCR this month was at 10 Shelford, where all 69 units were launched, although only 38 units secured sales, a take-up rate of 55%. Similarly to the OCR, previously launched but unsold units are now being taken-up with many developments reaching 100% take-up this month including 368 Thomson, Duchess Royale, Rochelle at Newton and The Orchard Residences.

The RCR was the only region to see sales fall in April, with the number of launches also lower than in March. In total, 477 units were sold in the RCR and 399 new units launched, with this region recording the highest take-up rate of all the regions at 120% as sales outnumbered launches. Two new projects launched in April – The Water Edge (98 units) and Centra Heights (90 units) – with all the units at Centra Heights sold in the month. Other projects enjoying high take-up include Ascentia Sky, where only one of the 300 units remains unsold, Questa @ Dunman where all 122 units have now been sold and Clover by the Park, where just 21 of the 616 units at the project remain unsold.

Dr Chua Yang Liang, Head of Research South East Asia said “Despite the punitive policies in place, demand for private housing does not appear to have abated. The return of demand is underpinned by a strong economic rebound and continual growth. The low financing environment is just as guilty in supporting this new housing demand rebound. Buyers today ought to be buying for long term play but if they are leveraging and investing because of the low interest environment, they could get burnt should interest rates begin to rise, particularly in about two years time when there is also a very large supply of new housing completions.

Policy risk is heightened and we urge buyers to be cautious.”