Market not ready for property cooling measure to be lifted

The Monetary Authority of Singapore (MAS) has said that it is still too early for the property cooling measures to go away. Unlike the car financing sector, the housing sector has yet to achieve the intended levels. The authorities are cautious about a sudden forward surge in the market should the measures be prematurely lifted.

c22aa9c3d5354ad6858cc5cec7ca1854Household debt levels have become more manageable as the debt servicing ratio helped keep new loans portfolios realistic and banks are feeling a reduction in the percentage of non-performing loans. The ultimate aim is a sustainable pathway for the property market – a balance between growth and affordability.

Though the market feels like it has been slowing down for quite a few quarters now, the numbers tell another story. Property prices have fallen 9.4 percent since it’s peak in Q3 of 2013, but between 2009 and 2013, prices rose 60 percent while income rose only 30 percent. Clearly the numbers are disproportionate and it will be some time yet before the market reaches a comfortable equilibrium.

Moving forward, the private resale market is showing signs of bottoming out, and investors who have been sitting in the sidelines may come back into the fold as long as interest rates remain low and home prices steady.


Indonesia opens up property market to foreign investors  

Buying an apartment in Indonesia may soon become easier. The Indonesian government is working towards changing the law in favor of foreign investors in a bid to grow the economy. The new regulations may be in place before the end of the year. Previously, the Agrarian law instated in 1960 stipulated that foreigners are not allowed to own properties in Indonesia.

Aeropolis Indonesia propertyThe new emergency law, named perppu, will take effect next month and foreigners will then be able to purchase apartment units though landed properties are still restricted. Property agents have already reported more enquiries for properties in Jakarta, mostly for properties in the suburbs priced around 2 billion rupiahs. Apartment prices in Indonesia are considerably lower than that in Singapore and so is the cost of living, thus this new law may indeed be the impetus behind a economic change in Indonesia.

Although job creation and economy growth are the motivation behind this move, some analysts say that this may change the landscape of property ownership for Indonesian citizens, as property prices may rise to unaffordable levels. The new law will no doubt come with caveats, for example price and property type restrictions, but the average Indonesian may still see the median prices rise about 20%.

Property cooling measure not going away

Yet. For now, as long as global circumstances continue to destabilise, growth slows and home prices remain high, the local government is unlikely to loosen the noose on the property market and the property cooling measures look set to stay.

Thomson Impressions2Property analysts say only a drastic and sudden market plunge will move the authorities into action as they focus their energy into repositioning Singapore as research and development investment-worthy. Though a complete reversal of the sudden market boom between 2008 and 2013 seems unlikely, the property cooling measures rolled out by the government over the past few years have effected a slow and gradual decline in property prices.

More households are saving up for their first home or to invest in a second, and putting away less for research, education, entrepreneurship and development. And as high home prices also mean higher wage expectations and thus higher labour costs, the high property prices here may be detrimental to Singapore’s overall growth over the next few years. In the near future, it seems unlikely that the property cooling measures will be lifted, until such time when a balance between national growth, competitiveness and housing needs is struck. Or till a sudden fall in property prices. Would a prolonged period of suppressed property market be any less damaging to the local economy?

Private home prices on the rise?

Twin-Peaks3Prices of completed private condominium units rose 0.3% in April, though analysts are putting it up to a technical rebound. After a relatively good start to the year, private home prices have fallen 1.1% in March based on the Singapore Residential Price Index (SRPI).

Some completed residential projects have seen promising signs of buying activity. The recent upward price adjustments could have been due to higher pickup rates of central region private homes such as units at OUE Twin Peaks and Ardmore Three.

Although the rise of home prices this year has been tentative, across the board prices have increased by more than 50% since 2009. Small apartment units lead the way with a 62.8% rise, followed by a 57.7% increase in non-central region units. Central region home prices are now 30.9% higher taking March 2009 as a point of comparison.

Ardmore THreeLast year saw a dip in luxury, prime district properties while this year, the increased supply of new completed private apartment units have pushed prices of units in the non-central regions down. Buyers remain cautious in their purchasing approach and are more price-sensitive though projects in prime locations and whose developers offer fresh new incentives will continue to bring in sales.

Sydney properties still finding ready buyers

Property prices in Sydney have become notoriously expensive, perhaps more so in the past couple of years than ever before. But the buyers are still ready to take the dive, no matter how deep, as reflected by the sales of a Darling Square apartment project by Lend Lease Group where all the 391 units were sold within 4 hours.

DarlingSquarePhoto credit: Lend Lease Group

Prices were not cheap, starting at A$630,000 (S$625,000) for a studio apartment and going up to A$3.5 million for a 3-bedder penthouse. In truth, property prices in Singapore are comparable and this Sydney property is situated in a prime location – just west of Sydney’s Central Business District. The property is set for completion by 2019 and will be able to house approximately 4,200 residents.

While more of the buyers were Australian, and with about 66 per cent buying the units to live in, property analysts are still waiting for the verdict to be out. Considering the proximity of these units to Sydney’s CBD, and positive rental yields, some buyers may eventually be looking at renting these units out.

There will be a construction boom in Sydney in the next couple of years as more than 81,649 new homes are expected to be built and completed within the time frame. By 2017, 34,300 new apartment units will enter the market. How will the rental market be able to cope with the spike in numbers come 2019, and will demand continue to increase?

International property markets to watch

Many of the hottest international properties are in cosmopolitan cities such as London, New York, Sydney, Tokyo, Melbourne, Hong Kong, Shanghai. But in cities which are just on the brink of breaking into the ranks of the big guys, the potential for growth could be immense.

Cambodia PRopertyPhoto: The Bay in Cambodia by architect firm Ong & Ong.

Though some may find investing in these emerging markets riskier, the lower costs now as compared to the potential yield make for an exciting landscape. In countries such as Cambodia and Vietnam, you may now find more developers building private residential condominiums and commercial properties such as shopping malls, shops and office blocks. The level of affluence in the local context is increasing, and foreign investment interest has been on the rise for some time now.

Though the political and economic environment in these emerging markets may not be as stable, investors have been able to get a glimpse of the potential these markets hold over the past 5 years. The rise in property prices and sales volume have been steady and yet prices remain affordable.

Considering Singapore’s relative proximity to Vietnam and Cambodia, and the rising number of Singaporean developers with good track records entering the market, buyer’s may be more willing to take the plunge.  In Cambodia, a 5 to 8 per cent net yield could be expected. The construction industry there is benefiting and by 2018, an additional 12.9 million sq ft of properties is expected to enter the market.


Melbourne’s Twin Peaks

As if the property scene in one of the loveliest Asia-Pacfic cities could not get more exciting enough, add towering twin 80-storey residential blocks and with almost 2,000 retailers in arm’s reach and there is buzz upon buzz.

QueensPlaceMelbourne‘s central business district (CBD) will be welcoming at least 819 new private apartments in just one tower alone of the 2-towered Queens Place, a landmark residential project right in the city centre atop Flagstaff Hill, the city’s highest point. Talk about cream of the crop.

Interspersed between residential units within the 80 floors of block 1, which has been launched in Stage One of the project, are commercial and retail spaces. With prices starting from A$429,000, there are a variety of units available including one-, two- and three-bedders, penthouses and sub-penthouses. Demand from local buyers have been positive and the project certainly presents itself well to overseas investors.

Photo credit: South East Property

This sparkling new gem also boasts amenities such as private lobbies, pool, spa, sauna, wine cellar, library, private gardens, private bars and dining rooms, and even poker and mahjong rooms. It’s prime location puts it within 2-minutes walk away from major shopping malls including Emporium, Myer, David Jones and Melbourne Central, and also the numerous offices nearby. Without doubt it would command considerable resale and rental yields especially with a rising Australian property market.

The project is marketed exclusively by South East Property in Singapore and Malaysia, in collaboration with Colliers International.

From New York to Sydney – Investing in Foreign properties

While the number of new properties coming up in Singapore may tilt the scale towards supply and give buyers an upper hand, in other major cities around the world, a decline in supply has moved property prices up the charts.

MelbourneProperty_CollinsStreetIn New York, the number of available properties, especially those in popular districts, have been on the decline. There has reportedly been a 20 per cent fall in the number of available listings, now standing at 5,654 which is much lower than the 10-year average of 7,047. This has placed the median selling price for a Manhattan apartment to just below the record-setting US$1 million (S$1.4 million) mark. Though that may not seem much, considering Singapore condominium apartments are selling at similar prices, the amount of space you get is much lesser. If it’s space you’re looking at, buyers may have to look outside of New York and into the suburbs. Needless to say, the lack of available properties below the US$1 million mark has made competition all the more heated, and buyers now find themselves having to stretch their budget to get the apartment they want. Landlords and sellers now have the upper hand.


At the opposite end of the globe in Sydney, Australia, property prices have been climbing steadily for the past quarters and now stand at an average of A$785,000. But prices in Sydney may have reached its peak as prices only grew 0.1 % last month. Over in Melbourne, the average prices stand at A$580,000 and prices have rise 2.4 %.

Are there opportunities in both cities for investment and is the time now?