Buyers return 150 private homes
A total of 150 private units at condominiums like Sky Habitat, The Tampines Trilliant and Hillsta we...
A total of 150 private units at condominiums like Sky Habitat, The Tampines Trilliant and Hillsta were returned last month—the highest figure in five years.
(Insiders say percentage return rates are still normal. Image courtesy of Thinkstock.)
The returned units made up some 5.7% of over 2,600 non-landed homes sold in the month of April, according to property research firm Square Foot Research. This includes executive condominiums (ECs), a public-private housing hybrid.
Yet despite the large absolute figure, industry insiders say that in percentage terms, the return rate is still in line with that of last year. They said the jump in absolute numbers could be pinned to April%E2%80%99s robust sales; that month saw homebuyers snapping up the most number of units in nearly three years.
Return rates are defined as returned units as a percentage of total non-landed sales in the previous month, and Square Foot Research%E2%80%99s data shows that this figure has remained largely below 6%.
In fact, while last month%E2%80%99s absolute return figure charted a five-year high, the earlier half of this year saw a higher percentage return rate. In January, only 52 units were returned, but this translated to a 9% return rate. Yet this rate was nowhere close to that of February 2008, when a whopping 41% (127) of 310 non-landed units sold were returned.
Typically, homebuyers sign an option that lasts three weeks. During this period, they are allowed to back out. However, should buyers choose not to exercise their options, they would have to forfeit 1.25% of the price. That means that for a condominium unit with a $1 million price tag, a whopping $12,500 has to be forgone.
Under what circumstances would a buyer be willing to foot such a forfeit? Speaking to The Straits Times, senior manager of research at Dennis Wee Group Lee Sze Teck noted that buyers might return units if they chanced upon more attractive offers, or simply if they changed their minds.
Ooi Yi Tung, director of Square Foot Research, told The Straits Times that it was also possible that some buyers were scared by comments made by National Development Minister Khaw Boon Wan. Last month, Khaw had warned that the trend of shoebox units was being closely monitored and that additional measures would be considered whenever necessary.
Observers say that January%E2%80%99s 9% return rate could have been the result of last December%E2%80%99s tough round of cooling measures, while February 2008%E2%80%99s 41% rate could be attributed to consumer concerns over the United States economy and uncertain stock markets.
Ooi said, “Speculation that another round of measures, likely targeting shoebox units, is imminent might have caused some of these buyers to pull out.”
Shoebox units, spanning no more than 50 sq m each, made up about 20% of the 2,496 non-EC units sold last month.
Last month, 15 units were returned at Hillsta in Choa Chu Kang, 11 units at EC development The Tampines Trilliant, and 10 more at Sky Habitat in Bishan. In April, 17 units were returned at Riversound Residence (Punggol), and nine each at Ripple Bay (Pasir Ris) and EC project Twin Waterfalls (Punggol).
Ooi added that the actual number of returned units every month could be higher, since it is possible for some buyers to have declined their options in the following month.
For more District Guides, you can head over to iProperty.com Singapore.