Lowered condominium prices scores sales

Two property launches over the weekend signaled a drop in new developer-launched private non-landed property prices. Kingsford Development’s 1,165-unit Kingsford Waterbay at Upper Serangoon launched at median prices of $1,050 to $1,180 psf. With those prices in mind, buyers snapped up 140 units over 2 days, a considerable success.

Over at GuocoLand’s 1,024-unit Sims Urban Oasis, prices ranged from $1,295 to $1, 595 psf. 29 sales were secured over the weekend, bringing the total to 170 units sold since 14 February. Developers’ spirits are buoyed by consistent daily sales. Most of the buyers were young Singaporean couples and upgrades.

KingsfordWaterbayProperty launches coming up in the next few months include Northpark Residences in Yishun and Botanique at Bartley. The former has its proximity to the Yishun MRT station and the attached shopping malls as a unique selling point; the latter might be a little tougher to market as the area is already saturated with a number of newer and resale apartment developments. But property experts still expect demand to be present, though perhaps it will be strongly dependent on pricing.

The next quarter might be the right time to gauge the markets’ response to changing market trends and it might be a close competition between new properties, resale non-landed properties and executive condominiums.

Good Class Bungalows prices peak

Against all odds, the Good Class Bungalows (GCB) sector of the luxury property market has reached a price peak last month. Amidst the general market slowdown, luxury homes have been hit the hardest with a decline in sales volume and prices.

The average price for GCBs rose to $1,428 psf from the $1,405 psf in 2012. The rarity of these properties, plus their equally rare price tags, make them fodder for only the rich and wealthy. With their deep pockets, they may not be as affected by the recent property market slump as the everyday joe. There are only 3,900 Good Class Bungalows in Singapore, and they are located in gazetted areas. Only Singaporeans are allowed to purchases these properties.

GoodwoodResidencesWith the lack of foreign buying of local property due to the 15 per cent Additional Buyers’ Stamp Duty (ABSD) levied in 2013, the luxury home market has been on the downward slide for sometime. In Sentosa, where anyone, local and foreigner alike are able to purchase a property, only 3 bungalows were sold last year at a 20% price drop. Even with the lower prices, average selling price was at $1, 676 psf.

Non-landed luxury apartments also did not fare well last year. The most number of units sold were at Goodwood Residences. 41 units were sold at a median of $2,461 psf at this Bukit Timah Road property. This may be due to high competition in the market with 7 luxury condominium developments completed last year, including Ardmore 3, Le Nouvel Ardmore, Sculptura Ardmore, Tomlinson Heights, Hana, Nouvel 18 and TwentyOne Anguillia Park.

Competitive pricing will help Property developer move units quicker

Home mortgage interest rates look set to rise sometime this year, and while new properties continue to come into the market, buyers will be spoiled for choice with executive condominiums, resale private apartments and new condominium units all competing for their attention.

Trilive KovanPricing might then be the differentiating factor in the current property market which is still finding its footing. In January, Symphony Suites in Yishun proved to be one of the best sellers in the non-landed private property market. Prices averaged at $1,010 psf, which was not considered to be on the higher end of the price spectrum. Most suburban properties fared better, making up 62 per cent of the total sales numbers last month. City fringe properties followed behind with 28 per cent and city centre homes took up only 10 per cent.

The TDSR (total debt servicing ratio) continues to be the main obstacle for buyers as the loan amounts they are now able to receive have been largely reduced. However, developers are unlikely to make drastic price reductions as land prices have been high for the past two years.

Contrary to concerns that new properties may outshine previous older launches and resale properties, some older developments have fared well in the last month. Trilive in Kovan sold 22 units at a $1,562 psf median price while 20 units in Jurong West’s Lakeville also exchanged hands at the average selling price of $1, 378 psf.

While the influx of new units and restrictive loan limits may be the way things go for the year ahead, the demand for residential properties may not necessarily have disappeared altogether. It may simply be a matter of buyers taking longer to weigh their options.

Low sales for resale homes in January

With city centre homes leading the way, resale home prices seemed to be walking down the same path as the month before, with a dip of 1.7 per cent. Suburban homes’ decline was slightly less steep at 1.1 per cent and across the board, resale homes saw a 0.2 per cent drop in prices. On the bright side, city fringe properties did fairly well, with a 1.5 per cent gain.

The number of transactions were part of the reason for the drop. In January, only 282 private properties were sold, down from 363 in December last year. Other reasons include the loan restrictions and overall lower buying sentiments. With the festive season coming up in a couple of weeks’ time, the numbers for February may not see a drastic pick-up, but from March onwards, the figures will be telling of the year’s property market prospects.

6DeryshireAs the year goes on, industry experts are expecting buyers to pick up on the softening home prices and keep a quick eye out for serious sellers who may have potentially value-worthy offers. There are sellers out there who are still holding on to their asking prices as they wait out 2015. The year could be a tussle between the these two groups. Any extreme asking prices on both ends will be unlikely to do anyone any favours.

Currently, areas with the highest resale home value (Measured by the amount buyers were overpaying or underpaying) of $60,000 are Watten Estate, Novena and Thomson. In Bukit Panjang and Choa Chu Kang, the prices were a negative $31,000.

A major shift in dynamics this year could be caused by the higher interest rates which are likely to happen this year. Buyers may take that into consideration, together with the tightened loan limits, which does not give them much leeway in negotiations. Sellers who are eager to make a sale will do well to consider these limitations as well and understand that it will not be easy for their buyers to easily fork out additional cash.

Making timely overseas property investments

The strengthening Singapore Dollar, in particular against the Japanese Yen and Malaysian Ringgit, may be just the incentive to look outside of the country for possible property investment opportunities. So what new launches lurk in these 2 countries, ripe for the picking?

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Photo credit: CBRE

In Tokyo, a 883-unit high-rise Global Front Tower in the Minato ward is calling out to investors with their 4.5 to 5.1 per cent yield. With prices starting at $740,000 for a 780 sq ft unit and going up to $1.04 million for bigger units in the 912 sq ft range, it might be quite a steal considering its prime location near the city’s main Yamanote Line. Situated within the development itself are amenities such as a childcare centre and convenience store, pluses for rental.

HarbourCity_Melaka

A little outside the Iskandar region, in the much-loved tourist spot of Malacca, a new mixed-use development made up of a hotel, mall and theme park, could be just the thing for those looking for investment properties somewhere closer to home. The Harbour City development, which off the coast of the new off-shore man-made islands of the Melaka Gateway development, is targeted to open by 2018 and will attract new tourists to the already popular city. Securing a unit in one of its 780 suites may give buyers the opportunity to own a holiday home of sorts which earns you cash even while you are away.

In short, property investment opportunities outside of Singapore are there, it is simply a matter of research and keeping an eye on property trends, and striking while the iron is hot.

Developers bank on Cospace Flexi condo units

Besides offering direct discounts and rebates, developers are hoping their offer of bare-minium spaces will help them move more units. These “CoSpace flexi” units are sans frills such as privatised balcony spaces or interior finishing. Instead, they are bare, with no interior fittings or floor finishing, which could be just what some buyers out there want, since they prefer to add their own creative touch to the unit. Now they can do it at no “additional” cost of having to pay for finishing they will ultimately remove.

Symphony SuitesThis move has already been taken by Qingjian Realty at a couple of the most recent executive condominiums (ECs), Bellewoods and Bellewaters. These “CoSpace flexi” units often come with a $25,000 to $45,000 lower price tag. At Bellewaters, a fully-finished and fitted 1,238 sq ft unit costs upwards from $756 sf while a no-frills space of the same size costs $736 psf.

At the private condominiums, Symphony Suites in Yishun, developer EL Development is also adopting the same move. Said to be the “cheapest condominium in the market”, prices for a unit in this 660-unit development range between $671,000 to $1.1 million.

Of late, most buyers have been Singaporeans, who are likely to be HDB upgraders or investors. At CapitaLand’s Marine Blue, 31 out of 124 units have already been sold. The most popular units were the one- and two-bedders, though a few penthouses sold as well.

Executive Condominiums – Now’s the time

If you are a second-time HDB property buyer, and are looking at upgrading from a HDB flat to an executive condominium (EC) – the time may be now. Before the resale levy really kicks in.

The TerraceImplemented in Dec 2013, the levy applies to ECs launched after Dec 9 the same year and as most of the EC launches from now on will be for units launched after Dec 2013, a levy of $15,000 to $50,000 will apply. And that’s no small sum to scoff at.

Executive condominiums have long been the way to move from public to private housing for most middle-class Singaporean families. As young couples now see this as one of the best ways to start their families, competition for the same properties have never been fiercer. As a hybrid between public and private housing, ECs will become private properties following a ten-year period. There is a income ceiling for applicants however, of a combined household income of $12,000.

As bids for EC land plots dip, mostly due to a saturation of launches in the last few months, prices and sales volume may not hold as well moving forward. Currently, ECs which just escape this resale levy include Bellewoods, Bellewaters, The Terrace, Lake Life and The Amore. They each boast their own unique selling point, with unblocked views at The Terrace, basement carparks at The Amore, nature-inspired landscapes at Bellewoods and resort-living lifestyle atmosphere at Bellewaters. Combined with options of units such as penthouses and condominium facilities, it’s the only logical step up for HDB upgraders.

Decline of home prices not reflective of cooling measures’ power

It all boils down to holding power. Of both buyers with their mortgages and home loans; and developers with their unsold units. Despite a year of seemingly repressed property market growth, the actual decline in home prices as a direct effect of the property cooling measures may not be as steep as it feels like. In fact, URA figures show only a 3.9 per cent drop in prices since Oct 1 of 2013 to 30 Sept of this year.

TheVermontCairnhillSince the property boom of 2009, home prices have increased 65 per cent till the end of 2013. Whereas the drop this year is a mere 4 per cent. Which means, property prices are still more than double of what they were before 2009.

Though the average total quantum price of homes may have dropped, the psf prices are maintained at a reasonable level as the main change comes from the diminishing property sizes. Though buyers’ affordability now ranges between $1million to $1.3 million, figures which have held steady for the past 5 years; the median sizes of new homes have fallen from 1, 195 sq ft in 2009 to 753 sq ft in 2014. This is a sure sign that developers are still holding on to their asking prices while giving less in terms of liveable space.

Resale homes are holding up better than new homes however, with a 3 per cent drop as compared to a 6 per cent drop of the latter. This is largely due to developers’ offers of discounts on unsold units. Examples of these can be seen at The Vermont At Cairnhill, and also at Sky Habitat, where more units were moved after a 10 to 15 per cent cut in prices.

Moving into the new year, property analysts are expecting sales volume of next year to be similar to 2014’s, though home prices are unlikely to experience a drastic drop. Rather, a gentle decline into a comfortable equilibrium is what most experts are prone to agree on.