China property – Foreign buying regulations ease up

The Chinese yuan has fallen drastically last month, and China’s economy is also showing some signs of struggle. In a bid to boost the overall economy and stabilise the property market, recent regulation changes have made it easier for foreign property buyers to foray into the market.

HongKong The Altitude
Since last November, interest rates have been slashed 5 times, and prices and market sentiment have made a turn for the better in July. The market seems to have finally stabilised, though supply is still on the rise, leaving many townships and cities with massive blocks of empty units. Despite all that the government has done to help keep the market afloat, will investors be more wary about the country’s economical uncertainty or will they see this as a chance to enter the market?

In more popular cities such as Shanghai and Beijing, developers and property owners are still enjoying a relatively steady flow of sales and rental yields. Some Chinese buyers have also forayed into the Hong Kong market, where demand is high considering the population density and continued influx of temporary residents. Property launches in Hong Kong are well attended and over the past year the Chinese government has spent S$98.5 million purchasing properties in Hong Kong for staff housing.

 

Private property market – The road ahead

The outlook for private properties seems a little vague for the moment. Though the market seems to be enjoying a respite, with prices maintaining its current level, and prices have risen slightly over the past two months, property experts are expecting an overall fall of 3 to 4 per cent in the Singapore Residential Price Index (SRPI) this year.

Buyers looking out for good deals are picking up units across both the central and non-central regions. Recent increases in the SRPI could be due to the rise in number of transactions especially in the central regions with 0.6 and 0.2 per cent increases in June and July respectively.

WoodhavenThe rental market, however, has remained weak, especially in the suburbs. And as rents begin to fall in the central regions, many tenants are making quick comparisons and opting to move into more centrally-located properties instead. For example, a private 2-bedroom condominium unit in Woodlands is being rented out for $2,000 a month, which is comparative to leasing a 3-room HDB flat.

But for buyers and investors who are considering purchasing private properties, investing in bigger resale or new properties may be preferable as smaller units will be facing fiercer rental competition once many of these units reach completion next year.

Sell now or later?

In real estate, it is often a timing game. How do you exactly know when to sell and when to buy? If you’re currently looking to sell your property, what should you be looking at for when making your decision of whether to sell now or later?

Just like buying a home, you first have to figure out why exactly you are selling. Is it to finance a new home upgrade, to invest in another property, or because you need the money urgently? The push factors are often stronger than you think when it comes to how much and how quickly you are willing to sell for.

KingsfordWaterbayAnother important question to ask yourself is “How much is my property worth?” Aside from getting a trustworthy real estate agent and valuator, spending a bit of time doing your own market research will help you determine where your property stands. A quick look at property websites, some of which provide tools to help you keep track of property trends and transacted property prices, or checking out resale HDB flat prices from the HDB website as well as attending property talks and seminars are just a few of the many ways to hone your pricing skills.

Market competition is also an important factor which affects pricing. Have a look at how other properties similar to yours are currently prices for a guide to pricing your property. But that said, if you know what qualities your property has above others in the market, list them. These may help you price above the market median. You do however have to be prepared to justify these premium prices and once you are confident the edge your property has, you will have a relatively easy time asking for higher prices. Location and proximity to transport nodes or schools are often a big plus; and sometimes the configuration of rooms, quality of renovation and age of the property could also be added to your property’s calling cards.

 

Home prices surge in Australia and New Zealand

There has been a recent surge in property prices in Australia and New Zealand, in particular Sydney and Auckland. Not surprising that these are higher-density cities with housing shortage and high immigration rates.

In Sydney, high-rise living is beginning to take off with developers looking for land to build upwards. Multi-unit properties have multiplied over the past year, with approvals for high-rise residential developments rising by 28 per cent. The increased supply of homes these properties will eventually provide may bring home prices down slightly but for now, they are sky high.

main-2Some home owners whose combined land area come up to at least 4,000 sqm, have even banded together to sell their homes collectively to developers at premium prices. For example, a single standalone brick house could fetch around $1million in the suburbs, but when sold collectively with 3 to 4 other homes, they could command $21 million which means at least $4 million per house. There are fears however that the country could be entering a property market bubble, which could prove dangerous for their banking system.

Over in New Zealand, lowered interest rates and official cash rates set by the Reserve Bank of New Zealand (RBNZ) has fuelled housing demand and more buyers are now investors, making up 41 per cent of all housing purchases. The New Zealand government is looking at ramping up housing supply to help relieve some of the pressure on the housing market.

Higher future demand for ECs?

Recent news of the income ceiling for new HDB and ECs (executive condominiums) flats possibly being raised have brought about a wave of questions from the market. Will this increase competition for new BTO flats? How will the resale HDB flat market be affected? Will the private property sector see lower or higher demand?

Since ECs and mass market private homes often go after the same pool of buyers, raising the income ceiling for ECs may mean increasing competition for the latter. With the higher income ceiling of $14,000, buyers who were previously ineligible for executive condominiums may now find themselves able to purchase these unique public-private hybrid properties, drawing them away from the private property market.

Sol AcresECs are considered public housing and buyers are able to take advantage of available housing grants for this property type. After 10 years, they become private property, which considerably ramps up their sale value. Buyers who have previously had to turn to private properties at much higher prices, and who are now eligible to apply for ECs will no doubt be in glee. The difference between an EC and a private property is about $300 psf and buyers comparing private homes and ECs in the same vicinity may come up with savings of up to $250,000. Not an amount to be scoffed at.

One recent EC offering, Sol Acres, have since sold 294 units. Upcoming EC launches are expected to give pricier private mass market homes without the calling cards of a good location, a run for their money. Prices of ECs usually stand at around $800 psf whereas private homes go from $1,000 psf and up.

 

Raised Income ceilings for HDB and EC flats

In the months ahead, the HDB market may see some significant changes.

In his National Day Rally speech on Sunday, Prime Minister Lee Hsien Loong announced a raise in income ceilings for new HDB flats as well as ECs (executive condominiums). The income ceiling for HDB flats could be raised from $10,000 to $12,000 and for executive condominiums, from $12,000 to $14,000. Just four years a, the income ceiling for ECs was raised to $12,000 but apparently income levels have risen since then. The government are also making it easier for lower-income households to purchase 2-room flats. The Special Housing Grant (SHG) will be raised from $20,000 to $40,000, giving them the financial support they truly need.

Forestville Executive Condominium.

Forestville Executive Condominium.

And to promote stronger familial ties plus cater to the growing group of young families who prefer to live near their parents, a new Proximity Housing Grant will help buyers who wish to live near their parents or married children secure their new flat.

This could be good news for buyers and home-seekers, as more applicants may then find themselves eligible for a new BTO flat or EC. But will there be more applicants now vying for available units. And how will this move  possibly affect the resale HDB flat market?

 

Property Auctions – Going, going, gone

With interest rates growing and demand on the decline, some home owners may be forced to allow their property to go to auction.

Mortgage auctions have been on the rise with a total of 99 homes put up for auction in the January to July period of this year alone. Property analysts are expecting an increase even as interest rates rise, with numbers hitting closer to 200 by the end of 2015.

GCB Leedon RoadRecently, landed homes, in particular larger ones such as corner terraces, semi-detached or detached houses, were the more frequent subjects of property auctions. Buyers may have been attracted to the higher profit margin of these properties, but failed to gauge their holding power. Finding buyers for these big ticket items is more difficult as they often come with a very much higher total quantum price and the pool of buyers is restricted to Singaporeans and Singaporean Permanent Residents (PRs).

Some of the properties which have sold at recent auctions include a Good Class Bungalow (GCB) at Binjai Rise, a detached house in One Tree Hill and some larger apartments in Seascape @ Sentosa Cove and Orchard Scotts.

Investors seem to favour smaller apartment units at property auctions as falling rental yields all around have made them more wary. Although not as dire as the 2008 Lehman Brothers and 1998 Asian financial crisis, investors and government authorities are keeping a close eye on the market direction. Property cooling measures have seemingly curbed rampant property flipping, but could there be more room for swifter, sharper manoeuvres? How much wriggle room should you leave yourself if you’re hoping to score a good deal at the auctions?

 

Private property sales steady

Private property sales seem to be steady in the past months, though there has been a recent spike in July as a new condominium launch pushed numbers up. Post June-holidays sales could also have made up the rise in number of sales transactions, plus some buyers may be rushing to close deals before the Hungry Ghost Month.

High Park ResidencesThe recent launch of High Park Residences in Fernvale performed exceedingly well in July, with 1,169 units sold. The average selling price stood at $989 psf. Property experts put much of their success to their ability to put the finger accurately on the buyer’s pricing ‘sweet-spot’. Smaller units with more affordable quantum prices seem to be the way to go in the current market. A good 15 per cent of the units went for under $500,000 and a 388 sq ft unit even sold at $373,450.

Situated close enough to the upcoming Seletar regional hub, the popular condominium has 2-bedders sized at 570 to 732 sq ft and 3-bedders at 872 to 990 sq ft. Considering a 2-bedder deluxe unit goes for $650,000, prices are more than affordable for the average middle-upper-class Singaporean. Other properties which have sold well last month include Botanique at Bartley, City Gate and Riverbank@Fernvale.

Moving ahead, property analysts are expecting the new property market to quieten slightly, though activity may pick up in the executive condominium (EC) segment.