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Demand for homes in core central region may pick up

Some market watchers said demand for homes in the core central region could pick up as early as the second half of this year, as prices continue to moderate. 

SINGAPORE: Some market watchers said demand for homes in the core central region could pick up as early as the second half of this year, as prices continue to moderate.

Property consultancy Savills added that some unsold units in the city were even transacted at below valuation.

According to recent marketing materials, Hijauan on Cavenagh is offering units at prices from as low as S$1,701 per square foot.

Located near Orchard Road, a 915 square foot two-bedroom unit is available for just under S$1.9 million.

Property agents said the 41-unit Hijauan project is about 75 percent sold.

It is not the only project selling below valuation.

Alan Cheong, research head at Savills Singapore, said: "We've heard of anecdotal evidence where pricing has been below valuations. In the Newton area for example, prices six months ago was S$1,800 per square foot.

"Today, you can get it for S$1,700 to S$1,600 per square foot for a 1,700 to 1,800 square-foot apartment.

"For core central region, it is probably going to be quite the norm -- (as) we expect more aggressive marketing strategies by developers."

In particular, analysts said the larger units will be a tough sell as cooling measures and loan curbs have affected the buyer's ability to afford them.

Savills said the pricing sweet spot for city homes now is probably between S$1.5 million and S$1.7 million.

Home prices in the core central region fell 1.9 percent in 2013 and some analysts expect to see another 5 percent drop this year. They said that could potentially trigger a return of buying interest for core central region homes.

Chris Koh, director of Chris International, said: "By middle of this year, we would have looked at four quarters of correction. Once the prices adjust by 5 to 10 percent, it would look significant.

"And the moment it looks significant, my gut feel is the buyers and investors who have been waiting on the sidelines will then pour back into the market again."

Market watchers said demand for city homes could also grow if prices of units in the city fringe, or rest of central region, continue to recover.

Home prices in the city fringe rose 0.4 percent in the fourth quarter of last year, compared to the 2.1 percent decline for city homes.

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