Overall price decline in Q1 but buying sentiment remains upbeat

Price-declines across the board for private residential, commercial and resale public housing sectors could mean the bottom of property cycle is close. For the 14th consecutive quarter now, private home prices have fallen, the longest period in the past 13 years.

That said, the general market sentiment has recently picked up as slight tweaks in the property cooling measures and a series of new and exciting property launches have gotten buyers’ blood flowing once more. Private home prices have fallen 0.4 per cent in Q1, slightly lesser than the 0.5 per cent in Q4 of last year.

Paya Lebar Quarter_Lendlease PLQPhoto credit: Lendlease 

Values of private residential properties have fallen 11.6 per cent since its peak in 2013, and this difference has probably revived purchasing interest as most buyers still see the potential of well-located properties in Singapore.

Total private home transactions hit 5,202 units in Q1, the highest in 15 quarters thus far. Property analysts are expecting the market to remain bullish and continue its growth barring any unexpected economic circumstances. City fringe properties are faring particularly, propped up by the strong demand for newly launched projects such as The Clement Canopy, Grandeur Park Residences, Park Place Residences and the Paya Lebar Quarter. Non-landed home prices have in fact risen 0.3 per cent in the city fringes and 0.1 per cent in the suburbs. Core central region property prices fell 0.4 per cent however.

ParkPlaceResidencesLanded home prices fell 1.8 per cent last quarter, likely due to the restrictions placed on these rarer commodities. Foreigners are not allowed to own landed properties. On the resale HDB flat front, prices fell 0.5 per cent, though the decline is expected to reverse itself soon, in response to the positive sentiments from the private property market.

Outlook hopeful despite fall in private home prices

After 14 consecutive quarters of declining private home prices, slivers of light are shining through – the suburban condominium market has seen a tad more activity with prices rising slightly; and for most part, the rate of decline has slowed.

SantoriniThe fall in prices of private homes stood at 0.5 per cent last quarter, similar to that in the last quarter of 2016. Suburban non-landed property prices have in fact posted a growth of 0.1 per cent after 13 straight quarters of decline. The positive figures in the suburbs could be due to the many new projects in areas outside of the central region which launched to much success in the earlier part of the year. These included developments such as The Clement Canopy in Clementi and Grandeur Park Residences in Tanah Merah. Previously-launched projects such as Parc Riviera and The Santorini also re-marketed their units resulting in favourable response from buyers.

Property analysts also contributed some of the uptick in buying sentiment to recent changes in the property cooling measures. Though the impact may not be obvious and immediate, it has nevertheless helped to inject some optimism in the market. Though the expectation is for property prices to fall 1 to 3 per cent in H1, the second half of the year should see prices stabilising and 2017 may just end on a happier note.

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.

 

New home sales yet to show significant change following SSD tweaks

Perhaps the recent changes in Sellers’ Stamp Duty (SSD) regulations may have no effect on the property market, or it might have a considerable effect. Whichever direction things might go, it is still too early to tell. Sales of new properties following the March 11 announcement has yet to show significant signs of change in terms of concrete figures, but the tweak has however boosted interest in new launches as shown in the response from the public at recent show flats such as that of Marine Blue and Park Place Residences.

MarineBlueCondoWhile earlier launches of The Clement Canopy and Grandeur Park Residences generated positive sales during their launch weekends, things have slowed down in the time following. That is however the general real estate market trend and is no cause for alarm. Most property analysts are glad for the change as it will bring about positive sentiments in the buying market, which could mean more energy, move net and direction in the months ahead. They are not certain this relaxation of the property cooling curbs will have a big impact on the market but are nevertheless happy the government has taken this step in moving forward. The next most likely impact would be the push for those caught in a dither of to-buy-or-not-to-buy.

On the other side, the Federal Reserve has raised their interest rates to 1 per cent and that could affect home loan rates, in turn diminishing demand from property investors.

 

Next major condo launch to watch – Park Place Residences

Following the successful launches of The Clement Canopy and Grandeur Park Residences, The Park Place Residences at the Paya Lebar Quarter (PLQ) previewed on 11 March and developer, Lendlease is more than hopeful about the response.

Paya Lebar Quarter_Lendlease

Photo credit: Lendlease

With a prime location in the developing Paya Lebar regional hub, the 429-unit property will provide fodder for the current pent-up demand in the market. The 99-year leasehold development released 40 per cent or 171 apartment units at its first release a couple of weekends ago. Most of they units made available for selection were 2- and 3-bedders. The Park Place Residences is part of the $3.2 billion Paya Lebar Quarter (PLQ) development which will consist of 3 office towers, 3 residential blocks and a mall. It is jointly developed by Lendlease and Abu Dhabi Investment Authority.

The developers are already planning for a second wave of release, where the pricing will be higher and based on the response from the first wave. As interest in smaller, affordably-priced units have been on the rise, buyers will be interested to know that Park Place Residences will have 117 one-bedroom units sized between 480 and 580 sq ft with prices starting at $780,000. The project features mainly two-bedroom units sized between 650 and 900 sq ft starting at $1 million – there are 234 of these units in the project. The remaining 78 units are 3-bedders of between 1,080 and 1,350 sq ft priced at around $1.6 million.

ParkPlaceResidencesThe average selling price is between $1,560 to $1,610 psf. While this is higher than the $1,400 psf median prices of units at The Clement Canopy and Grandeur Park Residences, the location and potential for growth of The Park Place Residences more than make up for it. It will be launched for sale on March 25.

Weak rental market not an obstacle for investors

While the weakening rental market may have been putting pressure on investors, the concurrent weakening private property prices are opportunities to some. While the leasing market has slowed down considerably, the property-purchasing market has been gaining speed, especially in the last quarter or so.

TRE ResidencesThe overall genial atmosphere in the private residential property market over the past few months have brought property investors back into the heat of things. As more newly completed properties enter the market and new projects such as The Clement Canopy and Grandeur Park Residences were launched to affirmative responses early in the year. Overall private home prices fell at the slowest rate in 3 years, which could point to an increasingly stabilising market.

It would be prudent however for investors to take into consideration that the property cooling measures have not yet been lifted, though some signs of relief have been provided earlier this month. In the past, profits of up to 60 per cent could be reaped in the short-term, but the long-term potential of a property, rather than quick turnarounds or a dependency on rental profits, will be at the heart of a good investment henceforth. Property analysts advise investors to consider cash-flow, calculate mortgage and maintenance costs carefully while keeping a portion aside for periods of negative cash flow when  the property is unable to be tenanted.

Grand opening launch for Grandeur Park Residences

The latest property development in Tanah Merah has sold more than half of its units over a weekend. Grandeur Park Residences reported strong sales with at least 58 per cent of its 720 units sold during its launch.

GrandeurParkResidencesSmaller apartments seem to be popular once again as the project sold most of the 96 one-bedroom units made available during the launch. Selling prices averaged $1,350 psf. The location, in close proximity to the Tanah Merah MRT station, could be one of the main factors pushing buyers to seriously consider the long-term and rental potential of the property. The condominium project which is also close to the Changi Business Park also has two- to five-bedders with prices starting from $550,000 for a one-bedder and $700,000 for a two-bedroom unit. Though the rental market is weak at the moment, buyers are counting on the property market rebounding by the time the project is ready for occupancy.

GrandeurPark2
Following the first private condominium launch this year of The Clement Canopy, response at the Grandeur Park Residences launch may be an expression of pent-up demand which could release keen albeit selective buyers back into the fold. However, the eagerness to snap up smaller units mean a lower overall quantum which may keep market figures low or at best level.

New Tanah Merah condominium show flat draws thousands

Grandeur Park Residences premiered its show flat to a grand crowd last weekend as they thronged the Tanah Merah site in all eagerness. It will officially open for purchase on March 4.

GrandeurParkResidencesMost of the potential buyers were there to suss out the new 720-unit residential project situated near the Tanah Merah MRT station. Its proximity to the MRT station and location has no doubt attracted keen eyes. Most have spotted this new project for its rental and investment potential.

As more than half of the units in Grandeur Park Residences are one- and two-bedders, the more palatable quantum prices is a big draw for investors. Prices of the 2-bedroom apartments start from $700,000. Though the developers expected a big crowd at the launch of the show flat, the response has been overwhelming and is indeed a positive sign.

ParkPlaceResidencesThere has been glimmers of hope in the resale flat and rental markets just within the first month of 2017. The new condominium market has also been faring well even before the start of the year. And there will be at least 2 other major launches coming up in the months ahead, such as Seaside Residences in Siglap and Park Place Residences in Paya Lebar. Thus even though analysts are hesitant about calling it a good year for the market, consumer confidence is once again building up.