Real estate market fluctuations hard to predict

It might be a matter of long and in-depth research. Or perhaps a intuitive touch to reading the markets. Maybe it’s a matter of luck. Whichever it is you possess, perhaps even a combination of all three, the property market has always been a delicate and somewhat temperamental creature to handle. As we reach the end of the first quarter of 2014, many may be wondering if this year of the horse may gallop into the horizon or merely trot on the spot. The three factors creating the most effect on the current real estate market are:

  • Property curbs
  • Weak demand
  • Oversupply of homes
Property-related rules may be updated often, thus it would be helpful to keep track of new or amended rulings.

Where are home prices headed?

For buyers looking for a place to live, it might be a good time to jump in. Those waiting for a market crash to scoop up the best deals may be waiting in vain as that is rather unlikely. Singapore’s growing population will make for a constant demand for housing, and since home buyers usually have a fixed idea of which areas they would rather live in, other factors such as location, proximity to transport and schools, may still determine the price they pay.

Property upgraders may find themselves in a good spot as well. As the private property market becomes increasingly competitive, the price difference between their current and desired property may be diminishing, thus in turn save them a rather substantial amount.

Property investors may be those finding themselves most in a bind as mortgage limitations and rising interest rates create boundaries which may hinder their progress. Analysts advice against hasty decisions as properties may not be the easiest to manage within an investment portfolio. They suggest that investors look at all possible angles when considering a property, such as the number of bathrooms, size and shape of the unit, hidden spaces which may not suit the taste of most buyers etc. All-in-all, investors need to plan for future interest rate hikes, the possible lack of tenancy, financial holding power and governmental policy changes.

Will PRs go Private?

Now that Permanent Residents (PRs) have to wait 3 years upon receipt of their PR status before purchasing their first resale HDB flat, will they opt for the quicker route to owning property in Singapore and go private?

Alana BungalowIf they do, the private mass-market condominium and EC (executive condominium) market will happily reap its fruits. While the possible decrease in demand for resale HDB flats may mean that Singaporeans hoping to upgrade to the private property sector may now find it difficult, more PRs may be taking their place in keep demand for non-landed properties high.

The HDB resale market is expected to drop 15 to 25 per cent, according to industry experts. But they are hopeful that suburban residential private condominiums will continue to pique the interest of PRs who might not want to spend money they will never get back on rental and would rather invest in new developer homes.

Primo ResidenceHas the price gap between public and private housing widened? Or the better question might be, is this widening the desired effect? What about the government’s objective of helping Singaporeans upgrade from HDB to private property? Not forgetting the in-between housing category of executive condominiums (ECs), are the ECs filling up that gap efficiently and reasonably enough?

EC Easy

Despite the recent loan curbs flexing its muscles, the market seems to be responding with exuberance, but only to executive condominiums (ECs). The financial restrictions placed on property loans may have made it more difficult to purchase private properties, but it has not yet applied to executive condominiums, thus making this sector ever more attractive to buyers. In any case, ECs will become private properties once it passes the 10-year mark.

Sea Horizon EC near Pasir Ris Beach.

Sea Horizon EC near Pasir Ris Beach.

What makes the difference? If you own a HDB flat but wish to apply for an EC, you need to sell your HDB flat once the EC is completed. Which means you only essentially have one property at hand at any one time. And under the new TDSR (total debt servicing ratio) framework recently set by MAS, the bank will only calculate the monthly payment for your EC unit. But if you were to purchase a private property whilst holding on to your HDB flat, the bank will calculate the monthly mortgage payment of both your HDB flat and private property, which makes it harder to loan the maximum amount. This in totality, affects the amount of money you can loan from the banks, and thus may require you to have more cash available before making a private property purchase.

LUsh AcresThe most recent EC launches were wildly received by buyers, Sea Horizon in Pasir Ris mostly for its unique location and Sengkang’s Lush Acres for its amenities and potential for growth. Sea Horizon was oversubscribed by three times, with 1,500 applications for its 495 units, making it the most subscribed EC in 2013 thus far. Most exec condos have been located in centralised, more urban landscapes, but Sea Horizon overlooks Pasir Ris beach, making its seaviews a unique selling point for its developers, Hao Yuan Investment and Sustained Land. Over at Lush Acres in Sengkang, 76 per cent of its 380 units were already sold over the weekend. Prices averaged at $785 psf and total prices ranged between $704, 000 to $1, 275, 200.

With this new consideration in sight, will buyers now flock more fervently to EC launches and could this possibly nudge the authorities to in turn adjust the criteria for EC purchases? How will that affect the overall real estate landscape?

Iskandar region properties continue their price rise

News of increasing interest in properties in the numerous Iskandar regions have brought prices of resale homes up, up and up. Original buyers of landed properties in particular, have recently began selling their resale homes at dramatically higher prices, some as much as twice the buying price.

Horizon Hills in Nusajaya, Johor, Malaysia.

Horizon Hills in Nusajaya, Johor, Malaysia.

The high-speed Singapore-Kuala Lumpur rail link which is slated for completion by 2020, will largely increase traffic flow between the 2 countries and make working and living in either, or both, much more feasible. And that could be why owners of landed homes have been asking for prices up to RM500, 000 ($194, 000) above bank valuations. Are there any takers? Singaporean property investors are thinking twice, it seems.

Although Iskandar Malaysia has been gaining much newsworthiness and a rising profile in the investment market mainly through its rapid development in recent years. One of the major milestones include CapitaLand and Temasek Holdings’ involvement in the development of a $3.2 billion township in Danga Bay as well as Singaporean billionaire Peter Lim’s proposed Motorsports City. But one of the main reasons may not be such a positive one. The lack of transparency of transacted prices have left home owners setting their own prices, simply based on how much a home in the vicinity has sold for. This however has not stopped a rising demand for landed homes in gated communities and as current supply has not surpassed demand.

Horizon Residences Bukit INdahIn popular areas such as the Taman Bukit Indah, a two-storey semi-detached house now costs RM950,000. It previously sold at RM400,000 in 2008. Over at Horizon Hills, a RM400,000 property now sells for RM1 million, more than twice the original price tag.

Has this put off serious investors? Does this give the Iskandar region properties a diamond-in-the-rough image or an atmosphere of uncertainty which makes one think twice before jumping into the deep end?

Resale home sales slightly dented by New properties

As more new properties continue to launch, resale homes are seeing a slight dip in sales volume as many opt for the former. Resale home prices also fell a 0.4 per cent in June. This is a steeper decline compared to the 0.2 per cent drop from April to May. Industry experts are not too alarmed by the drop as the June holidays usually mark a decreased interest in property sales and buyers could also have been waiting out the rising interest rates. Another reason could be that resale home  owners were asking “optimistic prices”.

Liv on SophiaThere is some debate over whether this decline will deepen and lengthen. Some analysts noted that secondary property market sales volume has decreased from two-thirds of the total transacted sales to only one-third since the last quarter of 2008. But others defer on the point, saying that less than a quarter of declining sales does not necessarily indicate the future demise of the secondary market and despite a dip in sales volume, resale home prices remain high.

In the current market where new is constantly available, the competition is high and thus investors are seeing more potential in the primary housing market. But who is to say that when the market is saturated, buyers will not turn back to the secondary market with its pluses. Buying the right property in the right location early usually means higher potential, but as the society changes and as global economies adjust to one another, there are always possibilities of older properties rising in value over the years.

La Fiesta condominium in Sengkang.

La Fiesta condominium in Sengkang.

It should also be noted that the drop in resale prices was the largest in the Central Region. Outside of the central region, prices of private properties rose  0.5 per cent following a 1.5 per cent drop in May. Property prices are unlikely to rise much more in the quarter as the market adjusts to the stricter financing rules imposed by the Monetary Authority of Singapore (MAS) last month. However, most buyers are still strong in liquidity thus able to hold on to their properties thus prices are also unlikely to drop.

No better time to Invest in Overseas Property

Simply because if the time is right for you, it is the right time. There are risks, which comes with all types of investment of course, but you can certainly make wise, calculated decisions by attending property seminars, speaking with experienced industry experts and doing your own research.

expo_sg_2013

With information of overseas property becoming more accessible and detailed, and with online sources available 24-7, information is at your fingertips, literally. Why purchase a property in Asia? It is nearer to home, and also makes a good holiday home option. Depending on the rules and regulations in the country of purchase, properties are cheaper and have more space for growth. And rental yields can be substantial, if you invest in the right property in the right location. Compared to Singapore properties, where home loans and buying curbs are increasingly being implemented, the real estate landscape overseas could be more fertile for short-term investment.

Horizon Hills in Nusajaya, Johor, Malaysia.

Horizon Hills in Nusajaya, Johor, Malaysia.

Malaysian properties are increasingly popular, especially with strong and steady developments at the Iskandar region. Horizon Hills in Nusajaya, Johor,is part of the Iskandar Malaysia development. Movenpick WHite Sands PattayaNear enough to Singapore with properties half the price or less of the same here, with the luxury of the space of your own, landed homes here are easily accessible via the North-South Expressway, Malaysia-Singapore Second Link, Skudai Expressway and the Perling Expressway. Cluster housing within a spacious buy cosy 1,200 acres, it encourages family and community living.

Looking further north into Thailand, beachfront living in the heart of Asia is offered by Apex Development. Situated in Pattaya, the Movenpick White Sands Beach Condotel development provides investors the opportunity to take part in a hotel development by purchasing hotel rooms which they can in turn earn rent on. This development is nearing completion, is targeted to be ready by end 2013.

But if it an urban lifestyle you fancy, Ayala Land, part of the Ayala Corporation in the Philippines is offering up that possibility at your doorstep. A variety of properties under the Ayala Land umbrella will put you in the centre of Makati city, Manila, with conveniences, shopping and much more in the vicnity.

Garden Towers and Escalada Scelod condominiums in the Philippines. Photo by Ayala Land.

Garden Towers and Escala Salcedo condominiums in the Philippines. Photo by Ayala Land.

Still undecided about which to go for, or perhaps you might even be considering a few, the iProperty International Property expo is where you will find all these developers and more, under one roof, presenting collections and properties at the same time. It might just be the best way to do your research, consult with experts, gather various information and compare pros and cons across the board before signing on the dotted line. The exhibition runs from 26 to 28 July at the Marina Bay Sands Expo & Convention Centre and you can pre-register here.

Suburban mass market home sales up 24%

Over the June school holidays, sales of new private condominiums have picked up speed, following the launches of J Gateway and Jewel @ Buangkok. It propelled new private home sales up by 23.8 per cent with 1,806 units sold in June alone. New private home sales have been increasing since April, with a 5.4 per cent increase in May but the quadrupled increase in June has caught analysts by surprise since sales are usually slower during the school holidays.

J GatewayNot only did the sales numbers rocket through the roof, the total number of homes sold exceeded the total number of homes which were put on the market. 1, 768 units were put in the market, according to URA’s data, but about 50 more were sold. But most developments which sold well were outside of the city centre and prime districts.

Top seller was the 99-year leasehold J Gateway condominium in Jurong East. All except one of its 738 units have been sold at an approximate of $1,486 psf since its launch late June. At Jewel @ Buangkok, units went quickly as well with 80 per cent of its 350 units. Median selling price was $1, 183 psf. Selected city centre properties which sold relatively well were Liv on Sophia. Since its launch in May this year, it has fully sold all its 42 units at a media price of $2, 400 psf. Executive Condominiums also helped boost sales with the recent launch of Forestville EC in Woodlands. 226 units have been sold thus far, at $730 psf.

Forestville Executive Condominium.

Forestville Executive Condominium.

Following such brilliance in June, would July’s numbers be lacklustre due to the newly introduced loan curbs? To counter this new measure, property developers might have more aggressive moves up their sleeves.

New properties to test waters post cooling measures

The best way to see how property buyers respond to the recent property loan restrictions may be looking at how they respond to the latest new property launches.

Vue 8Over the weekend, a number of new condominium projects were launched. 99-year leasehold Vue 8 Residence in Pasir Ris Drive 3 is one. With sea views and a popular location, it is set to sell at $900 to $1,200 psf. The slight sub-average prices, as compared to the $1,300 psf of similar new launches in the area, might just be the good measure of pick-up rate. There are 463 units in total, contained in eight 16-storey blocks. Units range from a 467 sq ft one-bedder and 1,701 sq ft five-bedroom apartment to penthouses of 1,873 to 3,391 sq ft.

Public housing hybrid, executive condominiums saw a new addition to their ranks with the opening of e-applications for Lush Acres EC at Fernvale Close in Sengkang. Prices have yet to be revealed, but a gauge of nearby properties show that Topiary EC units were sold at $897 to $977 psf. One could expect around the same for Lush Acres, though developer City Developments (CDL) has said the project “will be competitively priced with affordability in mind”.

Other private properties to be launched in the next couple of months include freehold Liv on Wilkie at Wilkie Terrace and The Glades, near Tanah Merah MRT station. Will property buyers maintain their interest in new properties or will those hoping to invest in their second and subsequent home choose to hold on to their cash?