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SINGAPORE, 24 June 2009 – The performance of the residential market in the second quarter of 2009 is turning to be an interesting talking point after the global financial crisis. Pent up demand has propped up new residential sales volume over the past few months and subsequently lifted secondary market.
In February 2009, new sales volume released by URA has shown an estimated ten fold increase from the preceding month with 1,323 units sold. Thereafter, the subsequent monthly sales continued to surpass the 1,000 units mark, which is a sharp rebound compared to the 2008 average monthly take up of only 330 units.
Though lagging slightly by almost a quarter, the positive sentiments in the new sales market have filtered to the secondary market with resale volume increasing in 2Q09. This unexpected spike has also motivated sellers in the resale market to become more aggressive in their asking prices.
Buyers are observed to be returning to the resale market for two main reasons:
Dr Chua Yang Liang, Head of Research, South East Asia at Jones Lang LaSalle says, “The recent surge in residential activity is buoyed largely by latent demand, which I do not reckon is sustainable. Similar trends have also been observed in the volume of housing deposits in the US although developers there remain more conservative in outlook. I do not reckon the current activity in the market is likely to remain if prices continue to rise unsupported by GDP growth. While it is too soon to call a turn just based on one quarter’s performance, the total decline by end-2009 could be a tad lower than the earlier forecast.”
It should be noted that the buying sentiments of the market are currently buoyed by short term factors like the pent up demand, discounted pricing and attractive mortgage packages. The sustainability of any market recovery lies beyond these drivers but the longer term factors such as growth in demand and economic production.
Chua Yang Liang
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