City fringe home sales in a bad spot
THE property market's woes have spread from the luxury sector to more modestly priced homes on the city fringe as new loan curbs keep buyers in check.
Unsold units are piling up in areas such as Bukit Merah, Kallang and Marine Parade, with developers forced to dangle big discounts to shift homes.
Homes in the area - dubbed the "rest of the central region" (RCR) in industry jargon - are right in the price range that leaves many buyers struggling to raise a mortgage, in the light of new rules that restrict lending.
"Developers of suburban condos have not needed to slash prices as most HDB upgraders find launch prices of about $1,000 per sq ft (psf) affordable. But developers of RCR non-landed homes have had to cut prices to fit the total debt servicing ratio (TDSR) limits of buyers," said R'ST Research director Ong Kah Seng.
Wealthy buyers of properties in the central city area generally do not require a loan and, so, are not affected by the TDSR, he added.
The city fringe area had 414 completed but unsold units islandwide as of June 30. This was 29 per cent of the national total, and up from the 20 per cent or 250 such units at the end of last year.
The central city area accounted for 63 per cent of such units as of June 30, down from 70 per cent at the end of last year.
Chia Siew Chuin, Colliers International research director, believes the build-up in completed but unsold units on the city fringe could be due to the recent completion of large-scale projects.
"It is also more challenging to find buyers for projects in the (area) where homes are generally pricier than mass-market condominium developments, especially in the light of the current weak market sentiment," said Ms Chia.
As of the end of last month, just six units had been sold at the 41-unit Riverside Melodies in St Michael's Road, which received its Temporary Occupation Permit in the second quarter.
Project launches on the city fringe have had a mixed reception as well.
About a week ago, the 500-unit Highline Residences in Tiong Bahru sold about 80 per cent of the first 160 units released.
But the picture at older launches is less rosy. #1 Suites in Geylang, which has been on the market for over a year, had sold just 38 of 112 units as at the end of last month.
"The pool of buyers who can afford RCR properties has shrunk. Unit sizing and price quantum are critical areas to consider to achieve sustainable sales," said Knight Frank Singapore research head Alice Tan.
She noted that while the cost of a 680 sq ft two-bedder home in this area tends to range from $1,600 to just over $1,800 psf, or $1 million to $1.3 million, "any price beyond $1.3 million would be a stretch for many people".
Before the TDSR, some leasehold apartments had even been launched at nearly $2,000 psf, added Mr Ong.