Collective sales push up private home resale prices

Districts 15 and 10 see marked rise in prices after sale of Amber Park and Royalville

The collective sale of Royalville was awarded at $1,960 psf ppr, and that of Amber Park, at $1,515. Analysts say resale prices of existing homes are being driven up by strong demand for replacement homes. PHOTOS: CREDO REAL ESTATE, KUA CHEE SIONG

Resale prices of existing condos and private apartments in District 15, which includes the Katong and Amber Road areas, as well as District 10 have risen significantly following news of the Amber Park and Royalville collective sales last year.

Edmund Tie & Co’s caveats analysis of URA Realis data also showed that in some instances, prices of larger units in the resale market have seen a bigger price hike compared with smaller units.

Analysts say resale prices of existing homes are being driven up by strong demand for replacement homes by cash-flush individuals and families who have sold their homes through collective sales in the nearby areas, among other factors.

ET & Co’s senior director and head of research Lee Nai Jia said: “Based on feedback from agents, those who sold their homes through collective sales are forming the bulk of demand in the secondary market, especially if they need a home that they can move into immediately.”

Another factor causing resale prices to go up is that most sellers have upped their asking prices – benchmarking them against bullish land bids in the vicinity, Dr Lee added.

JLL senior consultant Karamjit Singh said: “The Amber Park and Royalville collective sales were instrumental in an upward re-rating of land values in their respective areas. So what we are seeing is a trend of resale prices playing catch-up with anticipated prices at which new homes are going to be marketed in these locations.”

The collective sale of Royalville, near Sixth Avenue MRT station, was awarded at $1,960 per sq ft per plot ratio (psf ppr). Amber Park was awarded at $1,515 psf ppr.

When the deals were announced, they set a new high in unit land prices for their respective locales in the current collective-sale cycle.

Agents said another factor sending resale prices up is that some owners have withdrawn their listings in anticipation of a collective sale. This has shrunk the pool of available units.

ET & Co’s caveats analysis found that unit psf resale prices for 42 freehold projects in District 10 have risen by 7 per cent on average since the award of Royalville’s collective sale was announced on Dec 1.

In District 15, resale prices of 46 freehold projects have risen 5 per cent on average following the announcement of the Amber Park sale award on Oct 4.

The property consulting group studied resale transactions in the 2017-2018 period and compared deals before and after the two collective sales; it excluded outliers.

For District 15, it compared psf prices for transactions from April 1 to Oct 3 last year against sales from Oct 4 last year to March 20 this year. ET & Co used April 1 last year as the start date for the “pre-Amber Park” period instead of Jan 1, to factor in the fillip to private home prices from the launch of Seaside Residences last April.

For District 10, the property consulting group compared psf prices for transactions from Jan 1 to Nov 30 last year, against sales from Dec 1 to March 20 this year.

Mr Singh of JLL said: “I am not surprised by the fact that bigger resale units are seeing a more pronounced price increase. As a result of collective sales, the market is losing bigger apartments because the newer generation of apartments tends to be much smaller than those built, say, 30 to 40 years ago.”

Families looking for a replacement home following a collective sale would naturally prefer a bigger unit, said Mr Singh, who is also CEO of Showsuite, a new homes portal.

ET & Co’s study also found that developments at some stage of a collective sale are also enjoying higher premiums. For example, transacted prices at Mandarin Gardens for all unit sizes and levels have gone up by an average of 12 per cent since the Amber Park deal.