Overall price decline in Q1 but buying sentiment remains upbeat

Price-declines across the board for private residential, commercial and resale public housing sectors could mean the bottom of property cycle is close. For the 14th consecutive quarter now, private home prices have fallen, the longest period in the past 13 years.

That said, the general market sentiment has recently picked up as slight tweaks in the property cooling measures and a series of new and exciting property launches have gotten buyers’ blood flowing once more. Private home prices have fallen 0.4 per cent in Q1, slightly lesser than the 0.5 per cent in Q4 of last year.

Paya Lebar Quarter_Lendlease PLQPhoto credit: Lendlease 

Values of private residential properties have fallen 11.6 per cent since its peak in 2013, and this difference has probably revived purchasing interest as most buyers still see the potential of well-located properties in Singapore.

Total private home transactions hit 5,202 units in Q1, the highest in 15 quarters thus far. Property analysts are expecting the market to remain bullish and continue its growth barring any unexpected economic circumstances. City fringe properties are faring particularly, propped up by the strong demand for newly launched projects such as The Clement Canopy, Grandeur Park Residences, Park Place Residences and the Paya Lebar Quarter. Non-landed home prices have in fact risen 0.3 per cent in the city fringes and 0.1 per cent in the suburbs. Core central region property prices fell 0.4 per cent however.

ParkPlaceResidencesLanded home prices fell 1.8 per cent last quarter, likely due to the restrictions placed on these rarer commodities. Foreigners are not allowed to own landed properties. On the resale HDB flat front, prices fell 0.5 per cent, though the decline is expected to reverse itself soon, in response to the positive sentiments from the private property market.

Another HUDC estate tries for collective sale – Rio Casa

HUDCs certainly seem to making the news this year as yet another HUDC estate tries for an en bloc sale. Earlier last month, Braddell View became the last HUDC to be privatised and Shunfuville successfully completed their en bloc journey in May last year.

RioCasaHUDC HougangThis time, Rio Casa, formerly called Hougang N3 is trying their hand at the collective sale game. The process was surprisingly easy as 80 per cent approval was achieved within 3 weeks. Bidding is expected to hover around $450.3 million for the 286-unit site. If successful, each unit owner will receive $1.5 million which is approximately $586 psf. The property has about 73-years left to its lease and the new owner will have to fork out $57.5 million for a new 99-year lease. In addition, $141.5 million will be required for site-intensification.

Kingsford WaterbayThe site should be quite desirable as it features 200m of riverfront and greenery views with schools such as Holy Innocents’ Primary and High Schools and CHIJ Our Lady of the Nativity nearby. With the recent uptick in buying sentiments and the competitiveness in the Government Land Sales segment, developers may pay for the site despite its slightly pricier tag. There are considerations however, as the site is not near any MRT station and the nearby Kingsford WaterBay has unsold units remaining. It is still however early days and the Hougang area has a deep potential for redevelopment which may very well happen in the decade ahead. The tender for the site closes on May 23.

Outlook hopeful despite fall in private home prices

After 14 consecutive quarters of declining private home prices, slivers of light are shining through – the suburban condominium market has seen a tad more activity with prices rising slightly; and for most part, the rate of decline has slowed.

SantoriniThe fall in prices of private homes stood at 0.5 per cent last quarter, similar to that in the last quarter of 2016. Suburban non-landed property prices have in fact posted a growth of 0.1 per cent after 13 straight quarters of decline. The positive figures in the suburbs could be due to the many new projects in areas outside of the central region which launched to much success in the earlier part of the year. These included developments such as The Clement Canopy in Clementi and Grandeur Park Residences in Tanah Merah. Previously-launched projects such as Parc Riviera and The Santorini also re-marketed their units resulting in favourable response from buyers.

Property analysts also contributed some of the uptick in buying sentiment to recent changes in the property cooling measures. Though the impact may not be obvious and immediate, it has nevertheless helped to inject some optimism in the market. Though the expectation is for property prices to fall 1 to 3 per cent in H1, the second half of the year should see prices stabilising and 2017 may just end on a happier note.

Positive growth for new private homes

There is hope for the private property market yet, as budding signs of recovery peeked through not only in the resale property segment but also blossomed a little in the new private homes sector.SeasideResidencesFor the third consecutive month now, the new private homes sector has shown positive growth with 977 units sold in February, more than double the 382 sold in January, and despite there having only been one new launch last month. The Clement Canopy which was launched in February, did however put 250 new units into the market, selling 207 at a median price of $1,343 psf. A total of 550 units were released last month, compared to the 108 in January. Part of muted response the month prior to last could however be put to the Chinese New Year festive season which fell in late January.

Demand for executive condominiums (ECs) have also increased with 329 units sold, up 78.8 precent from January. The best-selling EC last month was Sol Acres with 82 units sold at the average price of $782 psf. Industry analysts are already seeing a more positive market sentiment this year, an overall sense of confidence from developers and buyers. With the recent relaxation of the Seller Stamp Duty (SSD) rules and new upcoming launches such as Seaside Residences, and as confidence ignites confidence, the hope is for the momentum to move the industry along as the year proceeds.

 

Winds of change in local property market

A decade or so ago, owning a second or third property might be the fastest way to secure your retirement funds or to even accumulate a tidy little kitty. Investment properties were considered a surefire way of earning additional income, but in the climate of today, property owners and investors have much more factors to consider and competition to battle against.

SunshinePlazaResidencesWith the rental market weakening, property agents are finding that it takes twice as long and also many more viewings before a property is successfully tenanted. And even then, for much less than before. Some property owners have had to reduce rents by almost half. Leaving the units empty are simply not an option for some investors as the rents go towards the mortgage or mortgages of their properties. It is after all better to have less help than none at all.

SerangoonHDBflatFor new investors looking to enter the market, the environment is a lot tougher than before. Considerations such as whether there is a large pool of HDB flats available for rental nearby, the long-term potential of the property, competition from other new launches or even within the same property, whether the local and global economy will affect businesses and commercial hubs nearby thus reducing the pool of foreign tenants, and so forth.

Before the market makes a complete recovery, a possibly lengthy period of stabilisation will ensue, despite the governments having made some allowances in the are of the property cooling curbs.

Grand opening launch for Grandeur Park Residences

The latest property development in Tanah Merah has sold more than half of its units over a weekend. Grandeur Park Residences reported strong sales with at least 58 per cent of its 720 units sold during its launch.

GrandeurParkResidencesSmaller apartments seem to be popular once again as the project sold most of the 96 one-bedroom units made available during the launch. Selling prices averaged $1,350 psf. The location, in close proximity to the Tanah Merah MRT station, could be one of the main factors pushing buyers to seriously consider the long-term and rental potential of the property. The condominium project which is also close to the Changi Business Park also has two- to five-bedders with prices starting from $550,000 for a one-bedder and $700,000 for a two-bedroom unit. Though the rental market is weak at the moment, buyers are counting on the property market rebounding by the time the project is ready for occupancy.

GrandeurPark2
Following the first private condominium launch this year of The Clement Canopy, response at the Grandeur Park Residences launch may be an expression of pent-up demand which could release keen albeit selective buyers back into the fold. However, the eagerness to snap up smaller units mean a lower overall quantum which may keep market figures low or at best level.

Why property cooling measures are here to stay

ABSD, SSD, TDSR, QC – These abbreviations related to property cooling measures implemented over the course of 5 years have taken root in the local real estate and construction industry and despite a much quieter market, may not go away anytime soon. And with good reason.

Aeon MelbourneThe demand for properties in other major Asia-pacific countries and cities such as Hong Kong, China, Australia and Japan have not seem to wane, reflected by soaring home prices in Hong Kong, Sydney, Melbourne and various top-tier cities in China. And this is despite their governments placing more restrictive regulations in place in efforts to curb investment outflow and property speculation. But perhaps it could be the case of too-little-too-late. And it also goes to show that investors are still looking for markets to hedge their funds and the pool of willing China investors looking to take capital out of their country agains a depreciating yuan.

CasaAerataIn Singapore, despite a gradually decline in home prices, the market has remained resilient and a untimely lifting of property curbs may result in a quick and unrecoverable increase in property speculation. In fact, despite the series of property curbs instrumented since 2013, the property cycle seems to already be reaching the bottom, which could only mean a turnaround possibly within the year. Last year, resale volume rose 28 per cent and total sales increased by 16 per cent from 2015, indicative of a recovering, or at least stabilising, market.

Freehold site to yield potential landed homes in Orchard road

The Orchard road belt has not seen landed homes in its midst, or at least new ones, for quite sometime now. They are few and far in between and usually cost more than an arm and a leg. But a freehold residential site near Orchard road worth $72.8 million might potentially yield landed homes.

OneTreeHillGardensThe One Tree Hill Gardens site measures at 39,063 sq ft and currently consist of 6 maisonettes and 7 apartment blocks or $1, 864 psf in asking price. The units here are of considerable sizes, ranging from 1,916 to 4,682 sq ft. Should the development succeed at a collective sale, each home owner could receive anything between $4 to $11 million. What the site could potentially yield are 13 detached and semi-detached houses. Considering the prime district, the rarity of landed homes across the board and more so in the centre of town, and the lack of sizeable residential sites readily available for redevelopment, marketing agent Knight Frank is confident of the interest the site will garner. Recent sales of sites in Grange Road, Cuscaden Walk and Hullet Road have all drew considerable bids of $190.5 million in total.

The area surrounding the One Tree Hill Gardens site is in itself an exclusive enclave of high-end apartments and some landed homes. Add on its future proximity to the upcoming Orchard Boulevard MRT station along the Thomson-East Coast Line and up goes its value.