It was reported in our de facto Business newspaper that a total of $107 million in gross profit was pocketed by non-landed private home owners from quick resale over the five quarters of Q1 2012 to Q1 2013. This is according to a report released by real estate firm OrangeTee.
The overall private residential price index, which includes private condominiums and apartments but excludes Housing and Development Board (HDB) executive condominiums, is now 60% above the trough in 2009.
Between Q1 2012 and Q1 2013, a total of 103 projects obtained TOP, according to data from the Urban Redevelopment Authority (URA) and Building and Construction Authority (BCA). Out of these, 68 projects had transactions in the same quarter upon completion, making up a total of 348 transactions.
Only one out of the 348 transactions was unprofitable, and this was described as a "one-off occurrence".
The report also highlighted that, over the same period, each newly completed unit yield an average return of 33%. The most profitable non-landed private residential segment was the Outside Central Region (OCR), which made an average profit of 41%, compared to 31% for the Rest of Central Region (RCR) and 25% for the Core Central Region (CCR).
In all three regions, however, shoebox units, measuring 50sqm or less, were less profitable than their non-shoebox counterparts. Average profitability per unit was $132,000 or 25% in the last five quarters, lower than that of the overall market.
Over the last five quarters, average gross profitability peaked at Q3 2012, when owners saw an average return of 43% per unit. However, since then, average profitability has been falling as the rate of appreciation in private home prices moderated, and such profitability may not be repeated in the future. This is especially when the full effect of the cooling measures starts to sink in.
Ultimately, the report expressed optimism for the future of the market, referring to sustained foreign capital inflow, low interest rates, and "record land prices" in recent Government Land Sales (GLS).
The million$ question is: for HOW LONG will foreign capital inflow and low interest rates be sustained....