Look to new launches for discounts
In the world of shopping, it's easy to spot a sale.
Big, bold, red-lettered signs plastered all over stores' windows, proclaiming huge discounts and savings.
But it's not so simple in real estate. To find a good deal, one needs to put in hard work and analysis.
To make matters worse, you must be brave enough to act before many others recognise the good deals and the herd mentality kicks in, pushing the prices up. It takes courage to buck the trend.
In February 2009, when the Singapore Real Estate Exchange (SRX) Price Index (private, non-landed) was down 26 per cent from the pre-financial crisis peak, there were some who went into the market.
While the rest of the market was in a state of panic, these buyers did their homework.
They analysed the situation and concluded that they could take the risk to invest in a down market.
My guess is that most of them were careful not to overextend themselves in the event that the market continued its decline. When the market eventually recovered, they saw huge gains.
The general mood of today's market, like in 2009, is one of pessimism.
Everyone seems to be griping about the market - that is, everyone but the shrewd bargain hunters.
A quick perusal of project data in SRX Analyzer revealed that some buyers are purchasing homes in fundamentally sound projects that are experiencing dips in prices due to the cooling measures.
For example, there have been two transactions (yet to be caveated) in Hillview Regency this month. This condominium's price trajectory barely hiccupped during the global financial crisis but it is selling at a discount in this market. (See Chart 1 above.)
Hillview Regency did its best to resist the cooling measures but finally, this month, it succumbed to two buyers who were able to negotiate a discount from the project's normal price trajectory.
For buyers with sound financials, new launches might be the place to look for discounts.
The numbers suggest that there is "a cooling measures sale" taking place in this segment of the market.
Typically, buyers pay a premium for a new home when compared with a resale home.
But since 2010, median prices have converged in the two private markets. (See Chart 2 above.)
The convergence of new sales with resale prices suggests that the cooling measures have had a larger price impact on the new projects market than on the resale market.
This means that new projects are priced more competitively than ever, relative to units in the resale market.
While there is no large sign outside Singapore properties proclaiming a storewide sale, the data certainly suggest that there are bargains to be had for those who are willing to look hard enough.
Sam Baker is co-founder of the Singapore Real Estate Exchange (SRX), an information consortium formed by leading estate agency companies to share proprietary sales and rental data. For more property-related articles and opinion pieces by SRX, visit www.srx.com.sg
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