DROP IN HOME
PRICES
Is now the time to
buy
COMMENT
By
SAM BAKER
It's a buyer's market these
days. Data from the Singapore Real Estate Exchange (SRX) shows the
number of home sales transactions last year dropped by 19 per cent
in resale HDB and by 47 per cent in private non-landed units.
The number of sales transactions in January and
February this year are also down.
At the same time, the SRX Price Indices show the
prices of HDB flats to be on the decline while private resale
prices have hit a plateau.
What does this mean for Singaporean buyers?
If the home you are eyeing is within your budget
and you can negotiate a discount to protect yourself against a
further drop in prices, now may be the time to buy.
It's a fool's errand to try to find the perfect
time to buy.
You might be waiting for prices to come down
further and wake up one morning to an upswing in prices.
By then, you might have missed out on a good
deal.
The best thing to do in a buyer's market is to take
advantage of the higher number of sellers than buyers and the fact
that the number of homes for sale on the major listing portals has
not dropped as dramatically as actual sales transactions.
This means that, as a buyer, you have negotiating
power because sellers are more willing to negotiate and lower their
asking price.
Consider using a third-party adviser, such as a
qualified real estate agent, to represent you in the
negotiations.
Advisers are worth the commission because they are
more knowledgeable about the market and better positioned to keep
the other side honest.
Real-estate negotiations are as much an art as a
skill, but everyone starts with the listing or advertised
price.
But be careful. A listing price does not reflect
the value of the home. It is merely what the seller hopes to
get.
You and your agent should ignore the listing price
and assess the value of the home based on hard research.
Ultimately, the seller can only command a price
that the market will beat.
Therefore, most listing prices must be realistic
and based on these factors:
• Recent transactions of
similar homes;
• Listed prices of comparable
homes;
• Location of the home and
its qualities; and
• How fast the seller needs
to sell.
There is no perfect time to buy a home. The prudent
approach is to stay within your budget and negotiate the price down
to a level that will be comfortable enough for you to ride out a
downturn in the market.
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
5 TIPS FOR FIRST-TIME
BUYERS
1 Do your homework -
compare and contrast
2 Seek out the advice
of a trusted real estate agent
3 Don't let
emotions cloud your financial good sense
4 Stay within your
budget
5 Don't negotiate on
your own. Employ a professional
INVESTMENT HOT SPOT
Geylang is emerging as a hot spot for
investment.
It is just a short drive from the city centre and the area has
sale prices that are lower than its surrounding neighbourhoods
because of its reputation as a red light district.
Yet, its rentals are supported by demand among
foreigners, especially singles looking for a relatively affordable
place to live near the city.
Some of the top capital-gain projects are located
there. Six of the top 10 projects with the highest capital gains in
the last five years are in the Geylang, East Coast and Tanah Merah
areas.
News, The New Paper, Saturday, April 5 2014, Pg 22