Good times are over for luxury homes market
The luxury homes market continues to be under pressure on both the rental and price fronts, with capital values in Singapore likely to correct further in the second half of this year. Notably, Singapore was the only market out of nine featured in Asia-Pacific to report a decline in capital values.
According to the latest Jones Lang LaSalle (JLL) Residential Index, values of luxury homes dropped 0.6% quarter-on-quarter for the third consecutive quarter, and 2.1% year-on-year, as the rounds of cooling measures continued to affect investor sentiment.
For the first seven months of 2013, sales volumes are down for the luxury home segment. Only 183 units were sold for the price tag of $5 million and above. In contrast, 2010 saw 444 transactions while 310 were sold in 2011. The median price of $2,489 psf is also the lowest since 2009.
Property analysts say the weakening demand for luxury homes may be attributed to the introduction of the additional buyers' stamp duty in December 2011. In addition, expatriates who came to Singapore are increasingly either mid- level or senior level with limited housing allowances.
Separately, the average monthly rent of high-end condominiums tracked by Savills continued to soften for the eighth consecutive quarter, dipping 0.2% quarter-on-quarter to $4.86 psf per month.
The subdued leasing performance in luxury homes could be due to more intense competition resulting from oversupply in the high-end market, combined with big-budget tenants placing more constraints on accommodation expenses.
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