No signs of weakening China property market

Shanghai and Shenzhen – both super cities for properties. Home prices in these 2 top-tier cities have not waned despite China’s government tightening rules on the property market.

Savannah Hong KongIn April this year, home prices in Shanghai and Shenzhen continued to rise 2.3 and 3.1 per cent respectively. Though the numbers are slightly lower than March’s 3.7 and 3.6 per cent, in light of economic instability in other countries, this is a good sign. Even within China, where internal restructuring, higher global competition and weakening demand have began to put the brakes on their economy, the property sector continues to enjoy the momentum of growth.

Just over a year, home pieces in Shanghai  have risen a whooping 62.4 per cent and that in Shenzhen have grown 28 per cent. Across 70 cities in China, home prices are now 6.2 per cent higher, a further increase from the 4.9 per cent in March. Besides buying in the mainland, Chinese investors are also buying up properties in various other international cities such as Vancouver, Sydney, Melbourne, Hong Kong; and countries such as New Zealand, Malaysia, Cambodia and Thailand.

Canada HouseEven while property prices in first- and second-tier countries continue to accelerate, third-tier cities are also beginning to post positive growth after a period of declining interest and sales. Policy makers are however concerned about the excessive lending and rising debt levels and may be prompted to tighten lending rules and implement further measures.

Private homes sales show slow and steady improvement

Twin-Peaks3Private non-landed property prices have been rising for 2 consecutive months now, a positive sign considering the recent market lull. Though values and volume are still lacking behind that during the peak of 2012 and 2013, any slight improvement is something to cheer for.

In April, the jump in non-landed homes sold was 17.6 per cent, a considerable 28.1 per cent higher on a year-on-year comparison with 2015. A total of 689 non-landed private units were sold last month. Property analysts are happy with the recent progress as it shows that the market is not completely dismal, and buyers will still bite if the prices are right. Resale private home prices similarly rose for 2 months straight, though the percentage were more modest with a 0.1 and 0.5 per cent increase in March and April respectively.

The residential developments which showed the most positive uptick were Twin Peaks in Leonie Hill, A Treasure Trove, D’Leedon, Double Bay Residences, Parkview Apartments, Thomson 800 and Carribean at Keppel Bay. The highest rise in home prices were in the core and central regions with a 1.3 per cent increase, while resale home prices in the suburbs fell 0.2 per cent.

Double Bay Residences SimeiAs the mid-year closes in, these 2 months may set the tone for the rest of the year, though much still hinges on how both local and global economies fare. Buying abilities and sentiments may follow suit.

Resale HDB flat prices up again

HDB resale flat prices have risen for 2 consecutive months this year, with a 0.2% rise in February. More than a distinctive market rebound, property analysts are embracing the slight adjustments as a sign of market stabilisation.

JurongEast HDB FlatIn fact, the market has been stable for the past year and a half, with less than 1 per cent fluctuation. It is still however, the buyers’ market. The number of resale HDB flat transactions have fallen, which could mean that demand is slowly waning, and the price point may be what the buyers are focused on. With the transparency of transaction data and statistics, more options made available such as singles now being able to apply for 2-room flats directly from HDB, and the injection of 9,000 new BTO flats into mature estates this year, buyers are more savvy and will only take the bait if the deal is truly good.

1,200 resale flats exchanged hands last month, down from 1,286 in January but still up from 1,148 last year though the lull could have been due to the year-end festivities. Industry experts are expecting resale HDB flat prices to remain flat this year, with an increase of transactions up to July when a fall in activity is expected during the Hungry Ghost Festival month.

Private condominium prices hold steady

The fall in completed private condominium prices was gentler last year at 3.5 per cent, compared to the 5.7 per cent from the year before. Prices are expected to hold steady this year as a dip in supply of properties in this sector bring prices to a plateau.

Jewel CDL

Photo: Jewel @ Buangkok

Demand for smaller apartments of up to 500 sq ft in size, have been weakening as their numbers, especially in the suburbs, have been on the rise in the past couple of years. Investors have found them more difficult to rent out in the dulling leasing market and those outside the central region or further from regional business hubs may find themselves competing for the same tenant pool. Tenants now prefer units with larger floor spaces with just slightly higher rents.

Sale prices of completed private properties within the central regions however have fallen more sharply as they usually come with a higher total quantum price. Compared to the many newer properties which have found a sweet spot with their total selling price, units in these central or prime districts see fewer overall transactions.

As the volume of unsold completed condominium stock diminishes and with the fewer launches expected this year due to cutbacks on land supply, resale properties could expect a happier year ahead.

When investing in properties overseas …

There are a number of things to look out for when investing in properties. And even more so in properties overseas. It may be familiar ground if you know your stuff, but otherwise it could be a rather risky affair.

Balmain ColgatePhoto: Apartment in Balmain, NSW, Australia.

Every country’s investment environment varies, sometimes quite drastically, and while brochures and presentations may look sleek and professional, the ins-and-outs of the local economic infrastructure may speak the same language. Thus finding out more about the legal and tax systems of the country in which the property is located would be one of the first and most important steps. The Council of Estate Agencies (CEA) has good advice for investors in their consumer guide for foreign property investments. Some countries have restrictions on the type of property foreigners can purchase, and also on whom they can eventually sell it to and the about of taxes or stamp duties they have to pay. In Australia for example, foreigners purchasing property have to seek approval from the Foreign Investment Review Board; whereas in Cambodia, where the market is just opening up, the restrictions are not as limiting.

Similar to how you would plan for any major investment, doing the groundwork and sums will help you financially. It is wise to know what your options are should there be a need to sell, and how long it would take you to do that would depend on the political and economic situation. Make the effort to find out the developer’s track record, and even take a trip down to look at the properties. After-sales property management could sometimes make or break your bank account and familiarising yourself with the legal systems of the country could ensure you are well-covered in unexpected circumstances. Having a solid point-of-contact in the country, such as a property agency or management agent could also reduce the risk and make the investment experience a smooth-sailing one.

October shows dip in resale private home prices

In the current market, where sentiments and demand are weakened by the property cooling measures, it might be idealistic to wait for the market to climb back to its peak in 2009 and 2013. But angle of decline for resale properties has been gentle, with a 7.6 per cent fall from January 2014.

26 NewtonPhoto: 26 Newton condo apartment

Though resale private home prices have dipped since then, the lowered prices may have brought more buyers back into the market. Resale properties or condominiums which were new launches between 2010 and 2012 have relatively larger floor area and in the current market, and buyers who are looking for a permanent home may find the fact that they have higher bargaining power a more-than-valid reason for approaching the resale property market.

Properties in the city fringes fared better as they are priced much lower than city centre properties, and yet offer the proximity or a good location and hints at exclusivity. Resale prices here have fallen just 5 per cent since the highs in 2013. This region has always been popular with investors and owner-occupiers and the lack of new launches here of late may have raised the number of resale transactions.

Suburban resale properties are facing a slightly different situation as the large number of new units have decreased the leasing and resale demand. Fiercer competition may have caused some owners to lower prices, more so than ever, buyers and tenants are finding the ball in their court.

Luxury tucked away – Seletar Hills

For now, the district of Seletar and its surroundings are fairly quiet and laid-back. But all that may soon change as the area is being redeveloped as part of the North Coast Innovation Corridor.

The exclusive Seletar Hills Estate in its midst holds a great deal of potential with the serene environment it provides as well as its proximity to town. A 999-year leasehold landed housing project is being built there at the moment –  Luxus Hills is currently in the seventh phase of its development and will feature 28 terrace units and 4 semi-detached houses. These landed properties are developed by Bukit Sembawang Estates whose other properties include Skyline Residences and Paterson Suites.

LUxus HillsPhoto: Luxus Hills

The surrounding area will soon be very vibrant with commercial and retail businesses including the Seletar Aerospace Hub, Greenwich V and Seletar Mall. Within a short drive or bus ride away are the Ang Mo Kio Town Centre and Compass Point in Sengkang. Situated somewhat midway between Yio Chu Kang, Sengkang and Punggol, and Ang Mo Kio, it’s proximity to the Central Expressway (CTE) also makes it a cinch to get to the Central Business District (CBD) and Orchard belt. The Hougang, Ang Mo Kio, Yio Chu Kang and Buangkok MRT stations are within easy reach.

Each of the Luxus Hills homes are designed to suit multi-generational families and come with four en-suite bedrooms, a guest room and roof terrace.

Other properties nearby include Riverbank, Rivertrees Residences, Seletar Park Residence, The Greenwich and Belgravia Park.

 

A possible supply glut in Australia property market

Economists are beginning to see possible cracks in the Australia property market as an onslaught of new homes threaten to cause a supply glut by 2017. The property market has been booming for awhile now, with most homes overvalued at 20 per cent. Partly boosted by the central bank’s series of 10 interest rate cuts since 2011, buyers have been snapping up units in one of the world’s most expensive property markets.

GreenSquareProperty prices in Sydney alone have risen 46 per cent in 3 years, with a 24 per cent average rise in the whole of Australia. The latest property offering is Green Square in Sydney, which will yield 10,000 new apartments, adding to the 213, 000 new homes which will be made available across the country. Perhaps some of the reasons for the possible glut could also be the lack of a corresponding rise in income and population growth. Confidence and capital spending have thus reflected this. Tighter lending rules have also effected a 13.1 per cent drop in investor loan growth.

Though buying will not cease or fall immediately, analysts are advising buyers to proceed with caution and to consider their mortgage options for the long term as banking rates will fluctuate and holding power will no doubt be what differentiates the wise investors from those in for a quick buck.