Private resale homes – Dip in sales volume and prices continue

The number of resale transactions of private properties have dipped across the board and that in turn has affected the pricing index reflected by the SRPI (Singapore Residential Property Index). SRPI figures showed a 0.7 per cent drop in September, despite hopes that the market will rebound after the Hungry Ghost Festival.

STeven SuitesProperty analysts are reporting an imbalance in the expectations of home sellers and buyers. Stronger holding power of home sellers have meant that fewer properties were exchanging hands and they have instead opted to hold on to their properties till the market turns around. With the exception of shoebox apartments it seems. There was a price gain there of 0.4 per cent. This could be a clear indication of the preferences of buyers in the current market situation and perhaps provides an inkling of the months ahead.

One of the most affected property sectors are the luxury homes. Although buyers and investors of these high-end properties may not be detoured by the additional levies and loan limits, they may be deterred by the buying restrictions. And as the number of unsold luxury properties increases, developers are now offering discounts to entice them back into the fold.

As 2014 draws to an end, many may be wondering how the property market will fare in 2015. As the government has recently announced that the property cooling measures are not likely to ease in the near future, property analysts are expecting a 8 to 10 per cent decline. What will that mean for the overall market and will any particular property type stand out? Will the drop in private home prices mean a similar drop in HDB resale flat prices or will the demand for resale flats rise as more turn towards this less expensive option?

Private home sales down in Q3

Despite recent new launches, private home sales remained lacklustre as the third quarter registered  lowest sales figures since 2008. Only 1,596 new homes were sold in the last 3 months, though 648 units were sold in August alone, signifying a plausible comeback.
 Tre ResidencesSome of the more popular residential properties were the newer ones such as Highline Residences, Seventy St Patrick’s, Lakeville, Eight Riversuites, and some new launches from projects such as The Panorama. As per previous years, post Hungry Ghost Festival meant home buyers were once again eager for new deals and were actively seeking property purchase opportunities.

Across the board, 6,030 private properties were sold in the first 3 quarters of the year, almost half that of the same period last year. Much of the decline was due to weakening demand in the primary market, which could be a result of the tightening home loan limits implemented in June 2013.

Upcoming launches of Sophia Hills, Tre Residences and Symphony Suites might bring renewed activity into the market and possibly close the year on a high. But most of the attention will be in the executive condominium (EC) market as the drought of new launches in this sector welcome new launches of Lake Life, Bellewoods and Bellewaters.

New life at Jurong Lake district

We’ve all heard about the various prestigious “Lake districts” of popular cities across the globe. Now, Singapore could finally boast a few of their own as waterfront living takes on a whole new spin. Sentosa Cove, Marina Bay, Punggol waterway and now Jurong Lake.

Lake Life ECAt the Lake Life EC (executive condominium) in the Jurong Lake district, almost 1,200 applications were registered when it was launched 2 weekends ago. And with one in three applicants being a first-time home buyer, it shows the demand for and power of these hybrid properties. An EC is sold under the HDB scheme but after 10 years, it becomes private property, making it value for money in the long run.

Though EC buyers may qualify for the HDB grants and subsidies, it largely depends on their income ceiling, which has been raised to $12,000 per household. Prices of these flats are also considerably higher than other HDB flats, new and resale.

As the price gap between private homes in the city centre and city fringe continue to narrow, and as suburban private properties rise in price, ECs may become the property of choice for growing households and young couples. How the scale tips may eventually affect the effectiveness and purpose of this hybrid property. Are ECs here to stay? Or could they possibly become obsolete?

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.

Prices remain low for private properties

With a drop of 0.3%, private home prices have slipped down the slope a little further in July. Property experts are taking this dip, 2 months in a row, to mean that prices could be stablising.

Bijou1Despite four new launches of private apartments Bijou, City Gate, Robin Residences and Citron Residences, which also meant a spill-over effect on surrounding resale properties, the market remained soft. Shoebox apartment units saw the largest difference, with a 0.8 per cent drop, with the non-central regions showing the most promise. Prices in the central region fell 0.7 per cent.

The biggest factor suppressing prices is the TDSR (total debt servicing ratio) framework. Since the authorities have expressed the fact that this cooling measure will not be reduced or removed anytime soon, the property market may see more slipping and sliding for now. The new year may bring a breathe of fresh air with new launches and some new properties reaching completion, though that could also mean a further dampening of the market with a larger supply and a diminishing demand.

Resale homes are expected to receive a larger blow as they often have older designs in comparison to the newer units and property buyers could be drawn by the discounts offered by developers.

New Thomson MRT Line will benefit East Coast residents

Not only will property owners in the North reap the benefits of the new stations of the up-and-coming Thomson MRT line, but those in the East Coast will also see the value of their properties rise in the long run as the new MRT stations run through Tanjong Rhu, Katong Park, Marine Terrace, Siglap, Bayshore, Bedok and Sungei Bedok.

LTA - TELPhoto credit: Land Transport Authority (LTA)

The Thomson-East Coast Line (TEL) will connect more areas in the Northern and Eastern parts of the country to the city centre and cut travel time considerably. There are a number of exclusive and boutique private residential properties in the East as it has been a popular area for expatriates, but a boost is expected when the TEL commences service in 2019. Property analysts are already expecting a 5 to 10 per cent rise in property prices, if the response to the North-east Line (NEL) stations are anything to go by. And upon completion of the MRT line, they foresee a rise of up to 12 per cent.

Some of the properties which may enjoy the most out of the announced realignment of the TEL includes condominium developments in the Tanjong Rhu area such as Casuarina Cove, Tanjong Ria, Meyer Residence, The Belvedere and Water Place. Properties nearer the already existing Bedok and Tanah Merah mrt stations may not see as significant a change.

Marine BlueNearer Siglap and Bayshore are private apartments such as Lagoon View, Laguna Park, Elliot at East Coast, Bayshore Park, The Bayshore and Costa Del Sol. Cote D’Azur, The Palladium and The Seaview along Marine Parade could also see a rise in home prices in the future.

How will developers price new properties in the area which have yet to launch? Will they release units are higher prices or will they keep to the current market values? New launches coming up include the 124-unit Marine Blue and 109-unit Amber Skye.

Toa Payoh’s facelift

As one of the oldest mature HDB estates in Singapore and HDB’s second satellite town, Toa Payoh has a past which evolved with the growth of the nation. As more new towns such as Punngol, Sengkang and even newer ones in the future such as Bidadari come up, older estates are welcoming timely upgrades.

And it is now Toa Payoh‘s turn as the popular estate saw an overwhelming response to the BTO HDB flats launch a couple of weeks ago. With it’s central location, full-fledge sets of amenities, MRT stations, bus interchange and established schools in its midst, it’s an estate which will stand its own for a long time to come.

TreVista in Toa Payoh Made up of mostly HDB flats, there has hardly been any new private homes launched in the district for almost three years now. However, a plot of land near  the MRT station has been put aside for development, and should a private property be launched in the spot, it will be sure to bring in the buyers and fetch high prices.

In the current market, resale flats sales have dipped from 25 to 15 per quarter, but rental prices and value appreciation of private properties in Toa Payoh has remained stable. Average prices stand between $1, 121 psf to $1, 460 psf with monthly rents currently between $3,60 to $4,10 psf. The private apartments in the area now are Trellis Towers, Oleander Towers and Trevista.

The years ahead hold great promise for the estate and its continued growth seems imminent.