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.

 

Hong Kong’s property prices expected to rise further

As one of Asia’s, if not the world’s, most expensive cities to live and work in, it comes as no surprise that the real estate in Hong Kong is one of the world’s costliest.

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Photo credit: www.onekt.com.hk

Despite the Hong Kong government‘s repeated attempts to cool the market, with implementation of stamp duties and laying down of other purchasing restrictions, property prices in Hong Kong have continued to climb. And things could be heating up even more this year as even Mr Li Ka Shing, the country’s richest man, predicts the market still have room for property prices to climb further. In November last year, private property prices reached a peak unseen since 1979 when the data was made available by the city’s rating and valuation department.

Although there has been some political unrest, mostly civil, in the city and interest rates have been on the rise, there is still space apparently, for slight rise in prices this year. It will not be a smooth ride up, but there will be increments made nonetheless. China Overseas Land and Investment for example has listed the prices of their latest private residential development in the former Kai Tak airport area for almost 20 per cent higher that the same which were sold in August. In a city where liveable land is scarce, developers have been known to pay exorbitant prices for land sites, for example the record ids for sites in the same Kai Tak airport area for US$1.8 billion or S$2.58 billion.

 

October’s new home sales up 128 per cent this year

With more that 1,252 new private homes sold in October, new home sales have risen 145 per cent from the 509 units sold in September and 128 per cent in a year-on-year comparison with 2015 when 549 units were sold.

thealpsresidences4The sudden spike may have been due to pent up demand after the slower months of the June school holidays and Hungry Ghost month in August, plus the launch of major projects in the later part of Q3. The 2 new property launches which garnered most of the sales were The Alps Residences in Tampines and Forest Woods in Serangoon Central. Each sold more than 300 units which made up 55.7 per cent of October’s sales. Other projects which consumers actively seemed out such as Stars of Kovan, The Trilinq and Kingsford Waterbay all sold only 30 units each, though understandably as these are much older launches.

Property analysts put the sudden rise in sales, a 15-month record high in fact, to the affordable prices put out by developers. Despite the slower economic outlook, consumers know a good deal when they see one and are willing to invest in what they consider to be long-term investment-worthy properties. Forest Woods is situated close to the Serangoon transport hub – the MRT station, bus interchange and NEX shopping mall – which could account for its popularity.

forestwoodsForest Woods was the top seller last month, with 364 units going at an average of $1,078 psf. Smaller units were purportedly gaining traction with buyers once more. Shoebox apartments, though aplenty in the market, remain affordable and property analysts report a direction change from investors who have turned their attention from riskier financial products back to the more stable property market.

 

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?