When will property cooling measures cool off ?

The past two years have seen the implementation, and perhaps effects, of a series of property cooling measures. From increased stamp duties to revised subsidies and the strictest of which, the TDSR (total debt servicing ratio) framework, restrictions have certainly risen the heat on the property industry.

Singapore still has some way to go before the property market achieves the sophistication it requires to reach new heights. Economist are estimating the second half of 2015 as the earliest the authorities are likely to cool off with the cooling measures. That is when most households would have managed to reduce their debt levels. However, property prices can be expected to fall by more than 10 per cent in the first half of next year, or at least show a substantial decline before curbs are removed. In fact, by 2016, property prices are expected to fall by up to 20 per cent due to the oversupply at that time.

Prices have stablised somewhat since the implementation of the property cooling measures, but the fall has only be about 3 per cent, which means the authorities could be waiting for a significant fall in figures, or a recession, before amending the rules. The fear could be the sudden upward rebound of prices which may far surpass the watershed of 2009. With the elections coming in 2016, 2015 seems like the turning point for the market and buyers and sellers alike may be watching closely to catch any opportunities  they can before things change once more.

Could 2015 be the year for home buyers? How will landlords, developers and sellers fare?

Do upgraded HDB flats bring higher resale prices?

Given an older resale HDB flat in a prime location and a recently upgraded one in a less popular HDB estate, which would you choose?

HDB recently announced that they will be speeding up the Home Improvement Programme, the Neighbourhood Renewal Programme and the Selective Lift Replacement Programme. Some sellers and property agents are putting a higher price tag on flats which have be selected for such programmes. But with caveats.

HDB MUPPhoto credit: HDB

Only HDB flats whose owners have already paid for the upgrading may have an edge in the resale market. As the upgrading is usually only billed and paid for after the work is completed, some buyers may find themselves having to foot the bill for the flat or estate’s upgrading work if the seller has not already done so. Though it may seem like a significant difference, property agents are saying that it will not affect resale prices on the whole. The most it will do is slow down the price decline.

In fact, some buyers may prefer not to purchase flats which have yet been upgraded as it may bring inconveniences such as dust and noise for a significant period of time. Only flats which have been completely upgraded can command a higher selling price. But buyers who are thinking ahead may consider these older flats for the potential they hold once upgrading has been completed. With elderly-friendly facilities, newer amenities, perhaps even more room, the future could be more promising than you think.

Private property out of reach for HDB Upgraders?

If home prices are falling, most would think that the upgrade from public housing or HDB flats to the private home market should be getting easier. But it seems the opposite is true.

Prices of HDB flats and a private condominium apartment are perhaps softening at around the same rate, or that of HDB flats possibly even quicker. This creates a widening price gap between resale HDB flats and private condominiums, and HDB sellers can no longer depend on the sales proceeds of their HDB flats to balance out the price of their new private condominium.

BellewoodsECPhoto Credit: Bellewoodsec.com

Does this also mean that more HDB flat owners will now be forced to stay put and thus decrease the number of HDB flats available in the resale market? What about those who may have already purchase a private property and have a limited time period within which to sell their HDB flats? WIll they be pushed to sell at lower prices hence suffering the growing amount they need to top up?

Property experts are expecting ECs or executive condominiums to be the bridging properties between these two markets. As a hybrid between public and private housing, buyers qualify for public housing subsidies but after a 10-year period, can sell their units as private properties.  There is also the question of home sizes, will HDB upgraders be willing to settle for lesser space and a higher psf price to make the leap from HDB to private home?

Blooming Balestier

Although it has had the reputation of being a red-light district, albeit a less infamous one compared to the likes of Desker road and Geylang, its proximity to the Novena medical hub and being on the city fringe has brought the value of its properties up. With a new round of property launches and mixed-use properties such as hotel-parks like the Zhongshan Mall, Zhongshan Park, the Days and Ramada hotels, the Balestier area looks set to be the next property hot spot.

Viio BalestierWith its fair share of pre-war preservation shophouses and a quaint, historical feel, just the right amount of new condominiums, hotels and malls has breathed some new life into the area without taking away too much of its original facade. This, coupled with expatriates’ diminishing housing packages, means an increasing interest in rental and sales of properties here.

One of the latest residential projects, Viio @ Balestier, has launched its two-bedders at $1, 600 psf. At Ascent @ 456, prices hovered around $1,477 psf. Cosmo Loft, yet another freehold property in the district sold 5 units at $1, 775 psf. Prices of new launches in the area have risen over the past 2 years alone, up by almost 10 per cent.

Though property owners who had bought into the area early may not be reaping the profits yet as resale property sales and rental demand has dipped across the board, property experts are expecting things to turn around in another 7 years or so.

A little east-side enclave – St. Patrick’s road.

The Thomson-East Coast MRT line looks set to have a big effect on properties near the future MRT stations. The exclusive area of St Patrick’s road is but just one of them. With a station in Marine Parade situated nearby, properties in the area may see a big boost in home prices as the future MRT line will cut down travel time to the city.

Grand DuchessAlthough situated in the prime district 15, near good schools and many other amenities such as the 112 Katong and Parkway Parade shopping malls, the Marine Parade library, and the market and town centre just a stone’s throw away, sales has been far and few in between for a long time. But private home rental prices has held steady. With new property launches coming up, buyers may now consider these properties in all seriousness, with their potential for high rental yields.

Currently, only a few private apartment blocks stand in its vicinity, such as the St Patrick’s Residences and the Grand Duchess @ St Patrick’s. New launches planned for the months ahead include Seventy St Patrick’s and Amber Skye. Despite the harsh conditions of the TDSR framework, buyers may be drawn to the area by its exclusive and lush surroundings, the convenience of amenities and schools just streets away, and the evergreen plus point of a MRT station nearby.

New private homes – Sales lacklustre

The hungry ghost month and the lack of new property launches during that time have affected new home sales in August. Sales were down 15% and only 432 units were sold although 351 units in previously-launched developments were put up for sale.

The PanoramaMost of the sales came from suburban properties, especially from newer launches such as The Panorama in Ang Mo Kio and Coco Palms in Pasir Ris. Median selling prices at the former was $1,249 psf and $1,046 psf at the latter. Whilst Eight Riversuites launched around the same time as Coco Palms in May 2012, the Whampoa East property fared better with average prices at $1, 345 psf. Positive sales at these few developments could be due to the lower prices at its re-launch. The Panorama for example saw sales picking up once median prices were lowered during its relaunch in May. It was official launched in January this year.

But in the upcoming months, home sales may see a rebound as new launches in the pipeline bring a surge of buying interest. New launches include Marina One Residences, Highline Residences, Seventy St Patrick’s., and a few executive condominium developments such as Bellewoods and Bellewaters EC.

Property analysts are however cautious about the amount of increase in home sales, and the overall sales figures for 2014. The TDSR (total debt servicing ratio) framework and other property cooling measures such as stamp duties for additional properties, may keep the numbers suppressed. Some developers could also be holding their launches for next year in wait of any policy or market shifts.

Marina One Residences breathes new life into Marina Bay

Activity at the Marina Bay district may see a boost as new units at the Marina One Residences were launched over the weekend. With its exclusive CBD address, the 1,024-unit residential development may see a more positive uptake as property cooling measures could have kept prices at a reasonably affordable range for investors.

Those with strong holding power and are looking for properties with a high growth potential may consider the Marina One development quite seriously. With one- to four-bedder apartments available in the mixed-use development, residents will be in close proximity not only the entertainment areas, the Central Business District but also the Marina One offices and the 65,000 sq ft retail podium, The Heart. Prices are set to hover around $2, 600 psf. Over the past year, prices averaged between $1, 945 to $2,694 psf.

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Buyers of units in the Marina Bay area, such as those at Marina Bay Residences, Marina Bay Suites and The Sail @ Marina Bay, have seen profits ranging from $60,000 to close to $1 million. Other properties in the area include V on Shenton.

With the Marina One Residences being one of the rare freehold apartments in the area, property experts are expecting its value to hold steady or increase over the years. Despite resale prices falling up to 8 per cent, and with expatriates now moving into less central areas such as the suburbs due to their housing allowance curbs, smaller units are still expected to do well as the mid- to senior-level foreign workforce may still favor the convenience and proximity of units in the CBD.

For this sector of the market, the main change which came about from the implementation of the TDSR (total debt servicing ratio) framework by the MAS (Monetary Authority of Singapore) is that buyers may now dictate how owners and developers price their units.

Shoebox apartments falling out of favor?

These tiny but self-sufficient apartments have been doing exceedingly well for the last five years, and many investments favored these smaller units as their total quantum is more affordable than the larger ones and are easier to find tenants for. But as developers caught on and began building more of the same units, the number of shoebox apartments, or units below 500 sq ft, rose in number. By 2015, 53,900 new private condominium units will hit the market, and most of them will be shoebox apartments.

Alexis @ Alexandra CondoAccording to URA figures, there are currently 2,400 such units in the market. By end of 2015, there will be 11,000. That is almost five times the numnber. Will this dilute the market of potentla buyers? No doubt. But landlords with units in highly accessible locations may find themselves having the upper hand. Others who own units further away from transport nodes, town centers may find it harder to secure rental rates which they had hoped for.

However current rental yields for shoebox apartments remain 1 to 2 per cent higher than other types of units, which are 2 to 3 per cent. Private properties with such units include Alexis in Alexandra road, Parc Imperial in Pasir Panjang and Suites@Guillemard.

Property analysts still see some brightness in this market as singles, young couples and expatriates with smaller housing allowances continue to lean towards these smaller, more affordable units.