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.

Private resale property woes

Have buyers of private non-landed properties decided to take a hiatus? November’s sales figures for private resale condominiums seem to indicate a widening gap between buyers’ and sellers’ price expectations.

With the tough loan limit still in place, the number of buyers for private properties have shrunk, much more so for resale units. Some buyers could be holding back as they wait for newer launches or are simply wary about jumping onto the bandwagon too early as industry analysts have predicted a tipping of the supply and demand scale in the next couple of years.

RIse OxleyResale properties in some districts have however fared better, some selling up to $80,000 above the valued property price. In the prime district 9, buyers have responded positively to properties in the Cairnhill, Killiney, Leonie HIll, Orchard and Oxley areas. And far out in the western district 22 comprising of Boon Lay, Jurong and Tuas, the average above-valuation price buyers have been willing to fork out was up to $30,000. At the fringe of the city, in district 11 of Chancery, Bukit Timah, Dunearn and Newton, prices went to approximately $15,000 above the market value.

So it seems that despite  announcements that properties in the city centre may be loosing its clout, the recent  numbers seem to indicate otherwise. How are the suburban resale sector responding to this shift? Are they shifting their preference to public housing options such as executive condominiums?

EC peasy weekend breezy

If the crowds at the latest executive condominium (EC) launch were anything to go by, the property market may look a little cheerier. Despite many buyers being out of town and the upcoming busy holiday season, response to The Terrace EC in Punggol was heartening. 100 units out of the 747 were sold over the weekend alone. The Terrace launched on Sunday with prices starting at $710 psf for a three-bedder.

The TerraceMany of the buyers were young families and HDB upgraders as the options for mid to larger-sized units were available. The average unit size range from 1,001 sq ft for a three-bedroom unit to 1,711 sq ft for a penthouse unit. Other executive condominiums previously launched saw a slower weekend, but that could be due to the usual year-end lull and the fact that most units have already been selected and sold.

Location remains the main draw, though the EC sector is looking more positive than the private property sector. The other executive condominium developments which recently went on sale include The Lake Life, Bellewoods and Bellewaters. Joining The Terrace in Punggol will be the The Amore EC which is targeted to launch in January 2015. As competition heats up within the same district, buyers may have a wider range of options and prices may also adjust accordingly.