Majority of unsold units located in central areas

The possibility of a surplus of private homes as well as a poor rental market are keeping home seekers from purchasing completed homes, particularly in the city centre, reported the media.

Notably, majority of the unsold units at completed developments in Singapore are located in upmarket districts 9, 10 and 11, showed data last week.

Of the 1,412 completed but unsold homes as at end-June, 63.3 percent or 894 units are located in the city centre, 29.3 percent or 414 unsold units are in the city fringe, while only 7.4 percent or 104 unsold completed units are in the suburbs, said Christine Li, Research Head at OrangeTee.

She noted prices of completed homes within the city centre dropped 1.9 percent in Q2 from the previous quarter, marking the biggest quarterly drop since Q2 2009.

"This could suggest that some developers have started to become skittish and have started to cut prices in order to move units to avoid Qualifying Certificate (QC) fines," she said.

Under Qualifying Certificate rules, developers are imposed with a certain fine if they fail to sell all the units in a project within two years of completion.

To move units, some developers have reduced prices in certain projects.

Bukit Sembawang, for instance, sold more than 30 units at The Vermont on Cairnhill (pictured) after it slashed prices to just over $2,000 psf from the previous average of about $2,400 psf.

Despite the price drop, consultants believe that homebuyers will likely remain cautious, partly due to upcoming surge in supply as well as the rising vacancy rates.

Islandwide vacancy rate for private homes, including landed homes, rose from 6.6 percent in Q1 2014 to 7.1 percent in Q2 2014 – its highest level since the 7.4 percent registered in Q1 2006.

The city centre area was the worst hit, with a vacancy rate of 8.5 percent, revealed the URA.

According to R'ST Research Director Ong Kah Seng, some owners of these units may have left their apartments empty after failing to fetch rents that could cover high maintenance costs.

Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg

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