A stable year for Singapore’s property market?

Resale HDB flat prices have fallen only 1.5 per cent last year, as compared to 6 per cent the year before. Industry experts are not expecting prices to fall much more this year and in fact last quarter saw a 0.2 per cent rise in HDB resale flat price index. But that may not mean a sudden rebound of HDB flat prices as the options available to home buyers have now increased, especially as private home prices have fallen and more are now eligible to purchase new BTO flats directly from HDB.
Poiz Residences2Photo: Poiz Residences

HDB has announced that they will be rolling out up to 18,000 new flats this year, 3,000 more that last year. Private properties are now more affordable as developers have caught on to buyers’ affinity to total quantum selling prices. Last year, private property prices dropped 3.7 per cent overall, and a 0.5 per cent fall was registered last quarter of 2015.

The number of new property launches in the 4th quarter propped up new property prices with launches such as Principal Garden, The Poiz Residences and Thomson Impressions. Prices of new units in the city fringes fared well with no price changes. Landed property prices however fell 10.4 per cent over the last 2 and a half years, with prices falling 4.4 per cent last year alone.

Property analysts are watching the market closely as they are expecting the interest rate hikes to put a strain on those servicing home loans, especially as the property cooling measures concurrently remain.

Buyers picked up properties worth $102.27 million at auction

Rising interest rates and restricted loan options may have amounted in more properties going under the hammer this year. Though the number was not drastically different from last year’s, the total property value fetched at the auctions was much higher. The total value of properties sold at auctions this year is currently at $102.27 million, the highest in these past 5 years. Last year’s total auction value was $72.5 million.

LuckyHeightsBungalowPhoto: Bungalows at prime locations could have high projected values.

Residential properties were the main draw at these auctions. And figures have been on the rise since 2009. A total of 34 properties were sold at the auctions this year, and out of that 26 were private homes. That is almost double of the 46 per cent of private properties in auction in 2013. Property analysts are expecting the list of residential mortgagees to grow next year as the combined effect of a dampened rental market, increase in supply of completed homes, interest rate hikes, prevailing property cooling measures and a general sense of a slowing economy, sinks in.

One of the largest sales this year includes $16.3 million single-storey bungalow at Branksome Road. The projected value of its redevelopment may have made it a bargain buy, even at the hefty price. For developers and investors hunting for a worthy investment, these mortgage sales may be fertile ground.

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?


Landed home prices set to rise

The spotlight has been on new and resale private mass-market homes recently. But with that market reaching saturation, attention is now turned onto landed private homes. Everyone knows how rare these types of property are in land-scarce Singapore, but prices have been falling due to the consumers’ diminishing ability to purchase these expensive properties.

Loyang Rise HouseBut the decline may ease up by end of this year. Analysts are expecting prices of landed homes to pick up next year. This may mean more home owners will hold on to their properties in wait for better prices. This restriction of supply could also be the start of rising prices. In the long run, landed homes do generally hold up in terms of prices better than condominiums. The drop in landed homes prices was only 0.7 per cent, compared to the overall private home prices of 1.3 per cent.

Meanwhile, buyers looking for a worthy landed property to purchase could look at areas such as Bukit Batok, Loyang, Jurong or Sembawang. Terrace houses are usually more affordable than semi-detached or bungalows, and they are usually the first to rise in prices when the property market bounces back.

One possibly glitch is the rental prospects of landed homes. Compared to apartments, they are harder to find tenants for.

Good Class Bungalows – Fewer sales but Prices Up

2, 400 in 39 gazetted areas. 49 sold in 2012. That’s the GCB real estate market for you.

Good class bungalow in Binjai Park.

Good class bungalow in Binjai Park.

Despite the property cooling measures implemented last year, the buyers are still biting and the prices remained resilient. Although the restrictions of a 16 per cent seller’s stamp duty and 60 per cent loan-to-value ratio may have stopped some in their tracks, the psf pricing of these rare commodities have risen 10 per cent to $1, 276 psf. The limited supplies definitely has a part to play. But perhaps as more are investing for the longer term and are more likely to be home occupiers, they may be willing to pay more. GCBs can be found in the Nassim, Dalvey, Tanglin, Binjai Park, Leedon Park, Ridout Road, and Chatsworth Road area.

The highest selling Good Class Bungalow in 2012 was one in Ridout Road which went for $60.6 million. Bought for $37 million by former goldman Sachs banker Thomas Chan, it changed hands in late March and now belongs to the Tecity Group which falls under the control of the family of the late OCBC Bank chairman Tan Chin Tuan. The second most expensive GCB sold, in Leednon Park, was for a much lower amount at $33 million. At 10, 800 sq ft, it holds six bedrooms and a pool.

The value of these bungalows seem only set to rise in then new year, though perhaps at a slower pace, depending on whether the weak market sentiment set about by the Europe debt crisis will take a turn for the better. Even as Singapore braces herself for slower growth this year, the global economy will affect Asia perhaps in a bigger way this year than the last.

Many units in High-end residential projects unsold

At least 8 residential property developments are reaching the end of their 2-year sales deadline and if they do not sell all their units by the stipulated date, the property developers will have to foot the deadline extension bill to buy themselves more time.

Martin No38Most are high-end private apartments such as The Marq on Paterson Hill, Hilltops in Cairnhill Circle, Scotts Square in Scotts Road, Martin No. 38 and Residences at Emerald Hill. One of the reasons cited for the dip in sales in the high-end market was the additional buyer’s stamp duty. Foreign home demand seems to however to going way off the charts to the luxury landed properties in Sentosa Cove with a number of bungalows going for sky-high prices of late.

But if you’re thinking that prices might start dropping, it might be way to early to wish for a christmas present. Industry experts say property developers are unlikely to drop the prices as this may affect their reputation and stir up unpleasant sentiments amongst earlier buyers. However they might give incentives such as stamp duty absorption or rental guarantees.

Ultimately, it might just boil down to a matter of how much holding power these developers have and how the immigration and housing policy change over the next year.

Any takers for a $82-million Bungalow?


Despite the wavering global economy, most of the cash-rich will remain cash-rich. Thus a $82-million price tag on an Adam Road bungalow is not surprising. And it wouldn’t be surprising either that someone might take the offer up sooner than expected.

Chee Hoon  Avenue bungalow sold at $28-million. Which other areas in Singapore have bungalows available for sale or rent?

Situated on Jalan Asuhan, also know as “Bankers Lane”, near Serene Centre and Coronation plaza, this 45,155 sq ft site will now also feature a major transport node, the up-and-coming Botanic Gardens MRT Station. It will also be near enough to a range of good schools along the Bukit Timah stretch, but yet exclusive enough to have an extensive land area to call your own.

As one of the few remaining good class bungalows in Singapore, the mere size of this plot of land makes it rarer than rare. And if it’s too rich for the taste, it can also be split into two, making perhaps a profit for the new owner. The most recent big-ticket sale in the same area was a $28-million Chee Hoon Avenue property.

Will the latest cooling measures however, be a deterrent to potential property investors?


Buying a home across the causeway

Interest in homes away from this red dot, mostly just across the causeway in Malaysia, have been growing stronger. Not that Singapore has run out of homes to buy though. So what exactly is drawing attention there?

When Ms June Chan first went to Johor Baru to scout for potential properties in February, she spotted a villa going for a pretty price. Built on a sprawling 16,000 sq ft compound was a single-storey bungalow with three rooms and a swimming pool. It was in the Leisure Farm development, in Johor’s Iskandar region. The price: RM3.8 million ($1.52 million). Within two months, Ms Chan, 52, decided it was a good deal and plunged in. ‘It’s a second home for living in while my Singapore house is for rental,’ said Ms Chan, who is single and retired from a multinational corporation two years ago. She is now doing humanitarian work. With property prices rising in Singapore, more Singaporeans have begun looking to Malaysia for investment or to buy their second homes. The weakening Malaysian ringgit, the lure of owning landed property and familiarity with the country are reasons they cite for looking north. The Malaysian property market has been heating up in recent years, much like in the rest of Asia.

Silverscape condominium in Melaka, Malaysia.

Official figures from Malaysia Property Inc – an agency that promotes Malaysia’s real estate internationally – the total transaction value of real estate in Malaysia was RM137.8 billion last year, up 28 per cent from RM107.4 billion in 2010. About 2 per cent of that figure is foreign investment. Johor has seen the strongest surge in interest from foreign investors in the past year, according to the agency. In the first half of 2010, foreigners made up only 4 per cent of Johor property transactions, for properties priced above RM1 million. In the corresponding period last year, however, that figure shot up to 25 per cent. Much of the demand has been generated by the buzz over the Iskandar region, earmarked by the Malaysian government as a major growth area for the country. There are also now big Singapore companies investing in Iskandar.

Temasek Holdings has a joint-venture project with Malaysia’s sovereign wealth fund Khazanah Nasional to develop land in Iskandar. CapitaLand has been appointed project manager for a 2ha urban wellness project in Medini North, a region in Iskandar.  Property agents have also been pulling out the stops to get Singaporeans interested by advertising, conducting roadshows and taking busloads of potential investors on property tours. Ms Donna Lim, property agency HSR’s overseas department head, said the number attending its property exhibitions has risen sharply from last year.

SENI condominium in Kuala Lumpur.

Agents say the number of transactions by Singaporeans has also risen. While there is no official data, agents like Propnex say that Singaporeans bought 50 units in the second quarter of the year, compared to around 25 units in the first three months. It is marketing five projects there in total, located in Johor, Kuala Lumpur and Cyberjaya. Mr Peter Lim, head of Leisure Farm Singapore, which arranges free trips for buyers, said Singaporeans had bought 35 units in the development over the past two months, compared to about a dozen in the first two months of the year. Mr Edwin Tan, director of the Paragon Residences @ Straits View Malaysia project, also in Iskandar, said Singaporeans booked 116 units at a roadshow earlier this month, compared with 54 bookings from Malaysians.

Apart from Singaporeans, Malaysians living in Singapore have also been buying property there. Lecturer Jude Nesa Rajah, 51, bought his first JB property on impulse eight years ago after seeing the developer’s promotional booth at a shopping centre. He paid RM100,000 for the 1,016 sq ft unit in Bukit Indah. It is now worth RM220,000. A Singapore permanent resident and father of two, he said: ‘My investment is literally paying for itself… we’ve been renting out the place for seven years now, for RM1,000 a month.’ He said he is looking to invest in more properties when the market cools, adding that he hopes to retire there with his 48-year-old wife, a teacher. While Johor properties have always seen demand, now Singaporeans are also heading further north, scouting for potential investments in Kuala Lumpur, Penang and Malacca.Ms Lily Tan, senior marketing and sales manager at Hunza Properties, said Singaporeans were the top buyers of Hunza’s newest condominium Gurney Paragon in Penang, making up about 15 per cent of total unit sales.

Boulevard condominium in Penang.

But unlike those who buy property in Johor as their second or retirement homes, Singaporeans who buy in Kuala Lumpur and Penang tend to view purchases as investments, said PropNex chief executive Mohamed Ismail. Ms Goh Yu Ming, 32, bought a 4,000 sq ft condominium unit in Kuala Lumpur’s main shopping district, Jalan Bukit Bintang, last year for RM2 million. Ms Goh, who works in investor relations, believes she can get a rental yield of 6 to 8 per cent. Rental yields in commercial hubs like Kuala Lumpur and Penang range from 5 per cent to 6 per cent, while in Johor they are typically 4 per cent to 6 per cent. In contrast, Singapore residential properties generally yield 2 per cent to 3per cent, consultants said. The weakening of the ringgit against the Singapore dollar is expected to further stimulate demand. It has fallen by 2.7 per cent in the past year to reach a 14-year low against the Singapore dollar.

The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.

Editor’s Commentary:
Kuala Lumper, Penang, Malacca, Johor Bahru. These are the top spots for property buyers looking to secure a home outside of Singapore. Whether as a holiday home or for future investment, properties in these Malaysian states are certainly forces to be reckoned with.