Good class bungalows still in demand

The private property, and perhaps more so landed property sector, has been the doldrums for most of the year. But the niche market for Good Class Bungalows (GCBs) has been thriving.

e704119a11f840b8865a9fb67a23b14eA total of 26 Good Class Bungalows were sold this year, with the total sales figure coming up to a whooping $587.75 million. Though it is nothing compared to the 133 sold for $2.38 billion at the height of the industry in 2010, it is comparable to the 29 sold last year for $682 million. But the average sf prices for GCBs have risen this year to $1,454 sf as compared to last year’s $1,388 psf. The Belmont Park, Chatsworth Park, Chestnut Avenue, Dalvey Estate, Raffles Park and White House Park areas received the most attention in 2014.

There are only 2,700 GCBs over 39 designated areas in Singapore, though the number may have increased slightly in the 1980s when GCB areas were gazetted. This resulted in some sites entering the good class bungalow market even though they are smaller than the usual 1,400 sq m size.

But property experts have noticed that the drop in transactions for these high-end properties were largely due to the  MAS-imposed TDSR (total debt servicing ratio) framework and ABSD (additional buyers’ stamp duty). Most buyers of these properties are likely to already have existing properties and the increased stamp duties will total up to a rather substantial sum.

They are expecting this market to fare similarly next year as the property cooling measures remain. But with buyers’ consideration possibly turning into long term value appreciation, the Good Class Bungalow sector will certainly stand its own.

$1 million sweet spot for home prices

The average affordability ceiling for properties have dropped by almost $200,000 ever since the Monetary Authority of Singapore (MAS) placed curbs on loans. The average price home buyers can now afford, or are willing to fork out, is $1 million. Properties between the total quantum range of $800,000 to $1. 2 million generally sit better with buyers. The range used to be wider, with homes reaching $1.4 million selling just as well.

LakevilleDevelopers have been quick to realize the shift and have been offering considerable discounts or competitive pricing for new launches. Smaller units such as studio apartments and one- or two-bedders have also performed better than their larger counterparts. About 8,254 homes priced between $700,000 and $1.2 million were sold during the last year. Properties which were offering more affordable units, such as the Coco Palms in Pasir Ris which launched units at $980 psf, were able to garner more sales.

And for buyers hoping to secure a home below $500,000 there are now more available, and more sold. In the last year, 291 units below $500,000 were sold from June 2013 to June 2014. Comparing to the year before, only 61 units were sold within the same time frame. Buyers consider smaller units easier for both occupier and rental purposes, plus most HDB upgraders rate affordability of homes as between $900,000 to $1 million.

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.

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.