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Issue 90

Copyright 2011-2012 All Rights Reserved.

p9 p11 p15
Where Will Property Prices Go From Here?
Property Buying Tip #4: CPF Component Singapore Property News This Week Resale Property Transactions (January 23 January 29)



Welcome to the 90th edition of the Singapore Property Weekly.

Im glad to announce that the 2012Q4 URA data has been updated for members. >> Click here to find out more <<
Hope you like it! Mr. Propwise

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Where Will Property Prices Go From Here?

By guest contributor Gerald Tay I'm a cautiously optimistic investor, who would rather see money on the table today, than have an over-realistic expectation or try to make godly predictions of an unknown future. As an investor, I avoid trying to be a future trend predictor, a 'fortune-telling' guru or think I possess psychic powers. Trying to be either will simply make me lose sleep every night. Worrying or thinking about what's going to happen tomorrow with so many changes happening will put unnecessary pressure on my limited brain capacity.

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SINGAPORE PROPERTY WEEKLY Issue 90 Recently within a short span of time, there were many new policies announced by the government, from the seventh round of property cooling measures, the population growth projections, future GDP growth, enhanced used of land for businesses and residential, new MRT networks, population ageing, and productivity growth. How will these policies affect property prices in future? Well, for starters, Ill bet my last dollar that in the coming years ahead, there will be many sales predators using these new policies as killing tools to hunt down unwitting prey in our rich property savannah. The difficulty of making forecasts based on policies Firstly, its very hard or near impossible to pinpoint any specific or even range of policies that may cause property prices to
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fall or rise per se. Due to our extremely volatile property market (besides Hong Kong) and being an open economy since 1965, there are many highly complex variables that work concurrently and we can never determine what will affect our property market specifically. Previously in my articles, I remarked that 'experts and 'gurus' in the media who often try to predict the unknown future (and with so much unrealistic positivity) are no more intelligent than you and me. There are huge differences between someone becoming a visionary like Li Ka Shing and Donald trump, an amateur who tries to be or thinks he can be one, and someone selling snake oil to unwitting buyers who think it is a life elixir. The many complex variables involved in the rise or fall of property prices are simply too many, i.e. interest rates, open economy,
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SINGAPORE PROPERTY WEEKLY Issue 90 currency exchange rates, government policies, population growth, world economy, regional stability, liquidity, money supply, investment inflows and outflows, local bank lending policies, foreign bank to bank lending policies, MAS policies, land supply, market psychology, equity and commodity markets, etc. The irrational behaviour of property prices In the past, especially in Singapore and Hong Kong, when the land supply goes up, property prices go up rather than come down as opposed to the simple economics theory of demand and supply. Governments, Property Developers and Banks cash in on this opportunity. And are you aware that this property price rise is not a fundamental growth phenomenon
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but rather a pure inflationary growth phenomenon caused primarily by hot money inflows which may very well disappear once an unexpected financial crisis erupts? The Asian financial crisis, 2008 crisis, and Spain/USA/Greece/Dubai/Iceland housing crashes are some good examples. Are you also aware that it does not take a high interest rate of 4% and above to see a fall in property prices? A mere 2-3% is more than sufficient based on historical data. In short, the property prices we are paying today may go up in value on paper, but to say if there is a real buyer in future who is willing to fork out a higher price is still a question that needs to be asked by any savvy investors. Are you paying up today for tomorrows capital gains?

It will depend on those many unknown

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SINGAPORE PROPERTY WEEKLY Issue 90 variables like future supply of dollars/money in the market which we wont know in advance. What we are paying today may already be the inflated price of tomorrow with little or zero capital gains. A clear example is the many properties that were bought by unwitting buyers at a high during 1996, which cannot even break even after 17 years today! In my personal opinion, to boost economic growth and GDP numbers to compensate for the tremendous economic loss (and taxes) between 2000 to 2005, during the 2008 financial crisis and for the future anaemic GDP growth of only 1% to 3% from now to 2030 as compared to a previous 8% a year on average, the government has taken advantage of a huge GDP growth on the back of foreign migrants to collect vast amount of taxes through rising property prices between 2009 and 2012.
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This uneven growth has benefited some, but has also created high inflation that affects many ordinary Singaporeans from home prices to daily expenses. Home prices shot up and many could not afford a new home. Those who sold their homes to profit from the capital appreciation were forced to rent for an unknown period, hoping that prices would fall to saner levels before buying again. But prices kept going up, up and up. Where will prices head? Many readers have asked, where will prices head to? Up or down in the next few years? My honest answer: I don't know or rather, I can only predict with no more accuracy than those experts in the media. In other words, I can be wrong and they can be wrong; I can be right and they can be wrong; they can be right, I can be wrong; vice versa.
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SINGAPORE PROPERTY WEEKLY Issue 90 Nobody can give a bulls eye answer or even come close to the outcome of the future. Secondly, 2030 is 17 years from today. What are we expecting? Will prices to continue to go up from now because of all the recent policy announcements like more MRT networks? Will prices always go up in future and not fall? Will buyers who buy today be able sell at a profit in year 2030 and use the proceeds to fund their retirement? Are buyers expecting the same kind of tremendous capital appreciation of the booming 1970s to 1990s period of a growing Singapore economy with average GDP growth of 8%, while in the next 17 years, an anaemic GDP growth of 1% to 3% is expected? Are investors expecting the World/Asian economy to continue to be like 2009 to 2012 in the years ahead? Are buyers hoping to retire comfortably with their homes
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by 2030 expecting a still booming economy by then, or will we become another Japan, Spain, USA, Greece and many other countries where many retirees cannot retire because they were too highly dependent on their increasing home values to provide for their retirement and it turn out completely otherwise? The precarious position Singapore is in Our position is very precarious because as long as the world economy is healthy we are in business. What will happen to a small economy like Singapore if there is a worldwide recession and worse, a prolonged one? That's why I always emphasise on buying any property for immediate rental today (as opposed to new launches, or to buy, hold and pray for prices to go up), as I believe that apart from the fact that real returns are
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SINGAPORE PROPERTY WEEKLY Issue 90 higher, rental rates will also go up faster than property prices in the future, especially due to the urgent need for many lower-skilled foreign workers (for jobs which many highly educated Singaporeans are not willing to do in future) in the services/manufacturing industries which are the core economic drivers. The most favourable investment tip of the day for many unwitting investors is with limited land and a growing population, property prices can only go up in future. As you can see by now, before concluding unwisely that the rise or fall in property values are primarily due to these two variables, we cannot simply pin it to a demand/supply of limited land and population growth alone. The Singapore Government is facing a dilemma balancing between growth versus inflation, and growth versus social stability. Not surprising, since housing was one of the
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most hotly debated issues at the last elections. Whether or not you should play the waiting game, depends entirely on whether you have the time and money to wait, or not wait. Things to think about when buying a home Your home, for example, is a personal consumer choice, rather than an investment. Use affordability and personal lifestyle choices to make that buying decision. However, when buying as an investment, it's an entirely different ballgame and you need to separate that as two different issues.

Some readers want to hear only favourable answers, and not a view that is opposite to what they think. Some are not realistic and not willing to accept the truth. My article is not meant to offend anyone, but rather, I hope to convey the realistic truth,
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SINGAPORE PROPERTY WEEKLY Issue 90 that being cautiously optimistic is a lot smarter than being totally unrealistic on future expectation of property prices. Heres my Rule of Thumb: Buy to make money today, not by selling tomorrow. Take care of the bad times, and let the good times take care of themselves.

Over the last 50 years, especially after the 2008 financial crisis, the world has changed rapidly and is still constantly changing. Investment strategies that have been applied successfully in the last 20 to 30 years may no longer be applicable in the more volatile economic years ahead. We must change to suit the times, failing which it may lead to dire financial consequences.

By guest contributor Gerald Tay, CEO of CREI Academy Group, who exposes widelyheld property investment myths that have proven highly ineffective in creating wealth, and prevent a comfortable retirement for the ordinary investor.

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Property Buying Tip #4: CPF Component

The Central Provident Fund (CPF) is a comprehensive social security savings plan that has provided many working Singaporeans with a sense of security and confidence in their old age. The savings in the Ordinary Account can be used to buy a home, pay for CPF insurance, investment and education. But only immediate family members (e.g. spouse, parents, children and siblings) can jointly buy property with their CPFs. Married persons can only buy property with their immediate family members if using CPF.

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SINGAPORE PROPERTY WEEKLY Issue 90 For non-related singles (i.e. unmarried, legally divorced or widowed), they can jointly use their CPFs to purchase one property (Public housing/HDB flat or private property) provided they are currently NOT using their CPFs for any existing property. When buying more than one property, you must set aside half of the prevailing Minimum Sum before you can use the excess savings in the Ordinary Account and the Special Account for the second and subsequent properties. There is a limit on how much CPF you can withdraw to service the mortgage loan over the total mortgage period. This is currently set at 120% of the purchase price or valuation of the property at the time of purchase, whichever is lower, for the first property. It is set at 100% for the second and subsequent
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properties. For property with a remaining lease of at least 30 years but less than 60 years, the withdrawal limit is the ratio of the remaining lease of the property when the youngest owner is 55 years old, to the lease at the point of purchase. For property with remaining lease less than 30 years, CPF cannot be used. Please refer to the CPF website for more details. You cannot use CPF to buy non-residential or commercial property such as shops, factories and office spaces. An incorporated company cannot use its shareholders CPF to invest in properties. By Eileen Tan and Ui Wei Teck, property investors and authors of Enjoying Mid-Life Without Crisis. Get dozens more tips in their new book.
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Singapore Property This Week

99-year leasehold Queenstown private housing site attracts 3 bids The 1.2 ha site located at Commonwealth Avenue opposite the Queenstown MRT Station attracted only three bids, with the top bid of $562.8 million, or $883 psf ppr. While the bid prices were within expectations, the number of bids attracted fell below expectations since it was expected to attract five to 10 bids given the fact that strata landed homes could be built on it and the popularity of homes in the Queenstown area. However, with the recent cooling measures and the upcoming supply from nearby sites,
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some developers might have chosen not to bid for the site. The site can potentially yield 700 units in a condominium of over 40 storeys given its 4.9 GPR. The estimated breakeven price and selling price are $1,3001,350 psf and $1,550-1,600 psf respectively.
(Source: Business Times) Better quality for the next generation of HDB flats

The next generation of HDB flats will look like those in Punggol South. Each precinct consists of 1,000 and 3,000 homes and has a high GPR of 3-3.5 which would mean that there will be more units available.

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SINGAPORE PROPERTY WEEKLY Issue 90 There will also be a neighbourhood park of 0.4-0.7 ha in size within walking distance of each block in a precinct, unlike the parks in older estates which serves more households. In addition, to save space, some carparks make up the first few floors of a block and gardens were also built on the rooftops of integrated carparks. (Source: Business Times) Housing Developers (Control and Licensing) (Amendment) Bill provides more transparency Under the amendment, developers are required to submit information on sales transactions in their projects (including purchase price and agreements such as reimbursements) that might be published or used for compilations, analysis, research studies or surveys. This will ensure that the
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caveats logged reflects true property values since the prices for caveats logged usually does not include reimbursements or vouchers. In addition, the showflats presentation will also be regulated, and the criteria for granting licences to developers tightened. Fines will also be increased by five times while offences under the Act and subsidiary legislations would be compounded. (Source: Business Times) Getting private home loans may be more difficult While MAS have not extended the restriction of the mortgage servicing ratio (MSR) to 30% to private home loans, it has advised financial institutions to do so to encourage prudence. In addition, broader rules on the debt servicing ratio (DSR) will be introduced. Property loans, car loans, payment of credit
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SINGAPORE PROPERTY WEEKLY Issue 90 card bills and repayment for any personal credit lines are all included in the computation of the DSR. (Source: Business Times) Private resale transaction volumes rose 16.7% in January As a result of buyers trying to avoid the latest cooling measures, the private resale volumes saw a 16.7% increase from December 2012 to 920 deals. The OCR saw the highest increase of 30% to 501 units, followed by the 17% increase to 229 units in the RCR. The resale volumes in the CCR, on the other hand, fell by 9% to 109 units in January. Meanwhile, prices of homes in the RCR and OCR increased by 2.5% and 1.1% in January to reach $1,256 psf and $997 psf respectively while prices of homes in the CCR fell by 2.9% to $1,878 psf. While the transaction volume in February is expected to remain lacklustre,
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stable prices could attract buyers and bring it up again. Meanwhile, the HDB resale market is seen to be stabilising, with the slight increase of COV by $1,000 to $34,000 and the slip in overall median resale price by 0.7% to $457,000.This attributed to the lowered MSR and the upcoming 23,000 HDB flats in 2013. An estimated 1,500 resale flats were sold in January, down from the monthly average of 1,560 in Q4 2012 while the HDB median rents remained at $2,400. Looking ahead, COVs can potentially fall by up to 10% in 2013. (Source: Business Times) Commercial Industrial sites continue to draw interest A 30-year leasehold 3.96-ha plot at Tuas with a 1.4 GPR attracted eight bids, with a top bid of $61 million or $102.18 psf ppr from Soon
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SINGAPORE PROPERTY WEEKLY Issue 90 Hock Group. Zoned for B2 development, its popularity is attributed to its size and its potential for development of both strata-landed factories and multi-storey factories.

Another plot which drew much interest is a 22year-and-5-month leasehold 0.3-ha plot with a 1.0 GPR in Tuas South Street 8 which attracted 13 bids with the top bid of $2.4 million or $73.45 psf ppr from Boilermaster Holdings. The site zoned B2 cannot be strata-subdivided within five years of the TOP.
The third is a 30 year leasehold 0.35-ha plot with a 2.5 GPR at Ubi Avenue 4 which attracted 10 bids with the top bid of $16.2 million or $172.00 psf ppr from Boustead Singapore's BP-Ubi Industrial. Its popularity is attributed to the lack of B1 sites as well as its location. It cannot be strata-subdivided within 10 years of the TOP. (Source: Business Times)
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Non-Landed Residential Resale Property Transactions for the Week of Jan 23 Jan 29
Postal District 1 2 3 3 3 3 3 3 4 4 4 5 5 5 5 5 5 5 7 7 8 8 9 9 9 Project Name THE CLIFT ICON QUEENS MERAPRIME QUEENS QUEENS THE METROPOLITAN CONDOMINIUM RIVER PLACE RESIDENCES AT W SPORE SENTOSA CV CARIBBEAN AT KEPPEL BAY CARIBBEAN AT KEPPEL BAY BOTANNIA BOTANNIA BOTANNIA HERITAGE VIEW VARSITY PARK CONDOMINIUM PARK WEST VISTA PARK THE BENCOOLEN BURLINGTON SQUARE SUITES 123 CITY SQUARE RESIDENCES THE TRILLIUM PATERSON RESIDENCE RIVERGATE Area (sqft) 495 560 915 1,313 1,184 1,195 1,787 2,766 1,259 883 1,335 1,281 1,270 1,561 2,616 1,615 1,249 936 883 732 474 1,216 2,390 1,313 1,023 Transacted Price ($) 1,220,000 1,088,000 1,390,000 1,950,000 1,720,000 1,630,000 2,380,000 3,500,000 3,657,000 1,545,000 2,300,000 1,700,000 1,590,000 1,880,000 3,128,000 1,700,000 1,168,888 860,000 1,300,000 1,000,000 750,000 1,920,000 5,999,000 3,265,000 2,350,000 Price Tenure ($ psf) 2,464 99 1,944 99 1,519 99 1,485 99 1,453 99 1,364 99 1,332 99 1,265 99 2,904 99 1,750 99 1,723 99 1,327 956 1,252 956 1,205 956 1,196 99 1,053 99 936 99 918 99 1,473 99 1,366 99 1,584 FH 1,579 FH 2,510 FH 2,486 FH 2,298 FH Postal District 9 9 9 9 9 9 9 9 9 9 10 10 10 10 10 10 10 10 10 10 10 10 11 11 11 Project Name NEWTON EDGE VISIONCREST ORCHARD SCOTTS LEONIE STUDIO MIRAGE TOWER WATERFORD RESIDENCE WATERFORD RESIDENCE OLEANAS RESIDENCE MACKENZIE 88 CAVENAGH GARDENS ARDMORE PARK GRANGE RESIDENCES ZENITH SOMMERVILLE PARK SPRING GROVE AVALON SPANISH VILLAGE VALLEY PARK PROXIMO DORMER PARK KELLOCK LODGE QUINTERRA VIVA 1 MOULMEIN RISE THE SPINNAKER Area (sqft) 441 721 2,282 689 958 1,044 1,023 1,227 872 1,550 2,885 2,852 592 1,948 1,668 1,582 700 1,356 1,119 1,249 893 1,787 1,345 1,249 1,281 Transacted Price ($) 960,000 1,500,000 4,320,000 1,288,000 1,710,000 1,650,000 1,590,000 1,808,000 1,215,000 1,900,000 10,500,000 8,380,000 1,070,000 3,500,000 2,950,000 2,750,000 1,100,000 2,125,000 1,750,000 1,868,000 1,285,000 2,275,000 2,800,000 1,930,000 1,760,000 Price Tenure ($ psf) 2,175 FH 2,080 FH 1,893 99 1,870 99 1,785 FH 1,580 999 1,555 999 1,473 FH 1,394 FH 1,226 FH 3,640 FH 2,938 FH 1,807 999 1,796 FH 1,768 99 1,738 FH 1,572 FH 1,567 999 1,563 FH 1,496 FH 1,438 FH 1,273 99 2,081 FH 1,546 FH 1,374 FH

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Postal District 12 14 14 14 14 14 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 16 16 16 16 Project Name BALESTIER POINT DAKOTA RESIDENCES ASTORIA PARK ESCADA VIEW ASTORIA PARK FUYUEN COURT PEBBLE BAY THE BEACON EDGE COTE D'AZUR PEBBLE BAY COTE D'AZUR KING'S MANSION MABELLE COTE D'AZUR SANDALWOOD EMPRADO SUITES WATER PLACE CELESTIA KATONG PARK TOWERS TEMBELING GROVE HOMEY GARDENS SILAHIS APARTMENT LAGUNA PARK BOON COURT EAST COAST RESIDENCES AQUARIUS BY THE PARK TANAMERA CREST THE BAYSHORE Area (sqft) 1,130 1,023 1,195 861 1,173 1,141 2,099 678 1,152 2,626 1,109 1,604 624 1,152 1,184 893 1,475 1,367 2,120 1,496 1,755 1,335 1,453 1,496 560 893 1,195 947 Transacted Price ($) 1,168,000 1,520,000 1,190,000 830,000 1,100,000 1,010,000 3,480,000 1,010,000 1,610,000 3,580,000 1,470,000 2,110,000 803,000 1,400,000 1,400,000 1,050,000 1,700,000 1,550,000 2,174,025 1,500,000 1,713,000 1,255,000 1,300,000 1,180,000 811,800 908,888 1,200,000 938,000 Price Tenure ($ psf) 1,033 FH 1,486 99 996 99 964 FH 938 99 885 FH 1,658 99 1,489 FH 1,398 99 1,363 99 1,326 99 1,316 FH 1,286 FH 1,216 99 1,182 FH 1,175 FH 1,153 99 1,134 FH 1,025 99 1,003 FH 976 FH 940 FH 895 99 789 FH 1,450 FH 1,017 99 1,004 99 990 99 Postal District 16 16 17 17 17 17 17 17 18 18 18 18 18 18 18 18 18 18 19 19 19 19 19 19 19 19 19 20 Project Name BAYSHORE PARK BEDOK COURT AVILA GARDENS EDELWEISS PARK CONDOMINIUM FERRARIA PARK CONDOMINIUM FERRARIA PARK CONDOMINIUM LOYANG VALLEY CHANGI GARDEN SAVANNAH CONDOPARK SAVANNAH CONDOPARK LIVIA OASIS @ ELIAS EASTPOINT GREEN CHANGI RISE CONDOMINIUM RIS GRANDEUR EASTPOINT GREEN MELVILLE PARK MELVILLE PARK OASIS GARDEN KOVAN RESIDENCES COMPASS HEIGHTS KENSINGTON PARK CONDOMINIUM RIVERVALE CREST RIO VISTA KOVAN LODGE RIO VISTA HOUGANG GREEN BISHAN 8 Area (sqft) 2,196 2,260 463 710 883 1,324 1,496 1,399 1,453 1,206 1,539 1,302 904 1,281 1,539 1,141 958 1,378 1,033 1,776 667 1,658 936 1,249 1,776 1,378 1,141 1,528 Transacted Price ($) 2,080,000 1,770,000 590,000 820,000 920,000 1,350,000 1,075,000 960,000 1,388,000 1,150,000 1,462,050 1,230,000 820,000 1,155,000 1,380,000 1,020,000 798,000 1,030,000 1,220,000 2,000,000 745,000 1,790,000 855,000 1,130,000 1,603,000 1,230,000 858,000 1,700,000 Price Tenure ($ psf) 947 99 783 99 1,275 FH 1,154 FH 1,042 FH 1,020 FH 718 99 686 FH 955 99 954 99 950 99 944 99 907 99 902 99 897 FH 894 99 833 99 748 99 1,181 FH 1,126 99 1,116 99 1,080 999 913 99 905 99 903 FH 893 99 752 99 1,112 99

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Postal District 20 20 20 20 21 21 21 21 21 21 21 21 21 21 22 22 22 22 22 23 23 23 23 23 23 23 25 Area (sqft) 1,141 1,991 1,615 1,421 990 872 1,216 926 1,496 1,485 1,033 1,378 1,066 2,669 1,141 1,227 1,249 1,076 1,055 1,658 1,206 1,270 1,356 1,528 1,087 1,206 1,270 Transacted Price ($) 1,230,000 1,950,000 1,500,000 1,300,000 1,839,800 1,607,000 2,115,000 1,600,000 2,255,968 2,200,000 1,500,000 1,998,100 1,298,000 2,980,000 1,250,000 1,300,000 1,240,000 968,000 932,000 1,700,000 1,138,888 1,100,000 1,168,000 1,300,000 888,000 930,000 1,100,000 Price Tenure ($ psf) 1,078 99 979 FH 929 99 915 99 1,858 FH 1,843 FH 1,739 FH 1,728 FH 1,508 FH 1,481 FH 1,452 FH 1,450 FH 1,218 99 1,116 FH 1,096 99 1,059 99 993 99 899 99 884 99 1,026 999 945 999 866 99 861 99 851 99 817 99 771 99 866 99


Postal District 25 26 27 27 27 27 27 27 27 28


Area (sqft) 1,173 2,185 1,130 1,313 958 1,152 980 1,335 1,485 1,335

Transacted Price Tenure Price ($) ($ psf) 908,000 774 99 2,120,000 970 FH 1,160,000 1,026 FH 1,280,000 975 FH 845,000 882 99 970,000 842 99 800,000 817 99 930,000 697 99 900,000 606 99 1,130,000 847 99

NOTE: This data only covers non-landed residential resale property transactions with caveats lodged with the Singapore Land Authority. Typically, caveats are lodged at least 2-3 weeks after a purchaser signs an OTP, hence the lagged nature of the data.

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