Buyers think property market cool-down is here to stay

Private property prices and sales have been cooling for the past few months, and the market sentiments are that the cool-down will continue into the next year. Almost 4 in 10 people think that property prices will continue to decline over the next 6 months, though young couples who are at the verge of moving into the private property market think that a rise in housing prices may still be possible.

SantoriniInstead of a drastic fall in property prices, what 2014 has seen is a stabilisation of prices. HDB flat prices started off the price-drop which began in the second half of 2013. The private property sector followed suit in the beginning of this year. The most hard-hitting cooling measure was the restrictive loan limit which meant it became harder to borrow money to purchase a property. Although this may have made private property prices fall slightly, prices of HDB flats have not fallen significantly enough and with it becoming harder to get a HDB or bank loan, buyers of resale flats may be priced out of the market.

Thus a valid question may be, is the price decline sufficient? Is the decline sector- specific and is owning a property in Singapore a feasible goal for most citizens? What else can the authorities do to ensure equal opportunities for all. As the country prepares itself for the next General Election, answers may come soon.

Lake Life EC in Jurong attract first-time buyers

Unlike its counterpart in Punggol, Lake Life EC in Jurong have been attracting mostly first-time applicants. Buyers at The Terrace executive condominium in Punggol were mainly HDB upgraders.

Lake Life ECEven the developer, Evia Real Estate, was surprised by the large numbers of younger Singaporeans. About half of the 534 buyers were first-time HDB unit buyers. Perhaps partly driven by the pent-up demand for ECs, especially in the Jurong district, as Lake Life is the first EC to be built there in 17 years; and also drawn by the promise of an estate rejuvenation with lakefront living and new amenities. Top that off with governmental subsidies for couples living near their parents, it is not surprising most of the buyers were already living in Jurong or the nearby HDB estates such as Bukit Panjang, Bukit Batok and Clementi.

This could signify a shift in buyers’ minds about the industrial and out-of-the-way Jurong of before. It has continuously added amenities and facilities to its midst, including libraries, schools, shopping malls and regional business headquarters.

Most of the buyers were below 40 years old and the average combined family income was $9,042. To qualify for a housing subsidy ranging between $5000 to $30,000 from HDB, the combined household income must not exceed $12,000. Perhaps this points to a new breed of home seekers and property buyers. Will private property developers eventually work to suit their needs and demands and close the gap between public and private property sectors?

EC peasy weekend breezy

If the crowds at the latest executive condominium (EC) launch were anything to go by, the property market may look a little cheerier. Despite many buyers being out of town and the upcoming busy holiday season, response to The Terrace EC in Punggol was heartening. 100 units out of the 747 were sold over the weekend alone. The Terrace launched on Sunday with prices starting at $710 psf for a three-bedder.

The TerraceMany of the buyers were young families and HDB upgraders as the options for mid to larger-sized units were available. The average unit size range from 1,001 sq ft for a three-bedroom unit to 1,711 sq ft for a penthouse unit. Other executive condominiums previously launched saw a slower weekend, but that could be due to the usual year-end lull and the fact that most units have already been selected and sold.

Location remains the main draw, though the EC sector is looking more positive than the private property sector. The other executive condominium developments which recently went on sale include The Lake Life, Bellewoods and Bellewaters. Joining The Terrace in Punggol will be the The Amore EC which is targeted to launch in January 2015. As competition heats up within the same district, buyers may have a wider range of options and prices may also adjust accordingly.

New private condos threaten Rental Market

As more new private condominiums in the suburbs attain their occupation-ready status, the number of apartments available for rental has increased significantly and fierce competition has brought rental prices down. Though concentrated mainly in the suburbs, where most of the new condominiums are situated, the decline has dragged the rental market down by 1.5 per cent.

FOresta Mount FaberAnd as most of these new condominiums are in close proximity to HDB flats, the HDB rental market has also been affected somewhat as tenants now realised they may be able to afford a private condo after all and instead choose this option over HDB flats. And as this pressure is exerted on the HDB market, some HDB flat owners may consider jumping over to the private property market and the HDB resale flat sector may see some shifting as a result of the spillover effect.

From January to September of this year, there were a total of 6,621 condominium units entering the market in the suburbs alone. This has pushed rental prices down 5.3 per cent and a 1.3 drop in the number of rental deals signed in September alone. However, a year-on-year comparison with 2013 showed an increase of 11.8 per cent in terms of the number of units leased. This could signify a shift of tenants leasing private properties as opposed to HDB flats as the price gap narrows.

Eight RiversuitesMoving forward, 2015 and 2016 may see a vacancy rate of 10 per cent and more if immigration policies remain the same and if rental prices become even more competitive with up to 20,000 new units reaching completion annually. Is this a sign that the cooling measures have worked? Or is it merely a sign that investing in residential property may have to take a different slant, to focus on long-term profits through property appreciation rather than on short-term rental profits? How does that then change the criteria for property selection?

New properties lower overall rent

Though the government has reduced land sales in the second half of the year, a fresh new crop of properties reaching their point of maturity in the next year may have some effect on the rental prices of private properties across the board. In 2013 alone, 16,000 new non-landed properties entered the market and 25,000 more are expected to flood the market by 2016.

Shore Residences on Amber Road

Shore Residences on Amber Road

Tenants will have more rental options ranging from units in brand-new condominium to those at older private apartments as a large supply of condominiums enter the market next year. And as most tenants in a new development receive keys to their units at the same time, they may face competition from one another as they put up their units for rent at the same time. Older neighbouring properties as well as HDB flats may also face the same competition as tenants opt for newer choices. Rental prices may waver and some landlords may find themselves having to lower the rent to secure a suitable tenant.

Landlords may find themselves competing for the same and somewhat decreasing tenant pool, especially with concurrent restrictions placed on the foreign workforce. Diminishing expatriate housing allowances may also mean tenants may be looking out of the city centre for rental options. And though most of the new properties are situated out of the central region, the sheer supply may overshadow the demand.

Take the Katong, Joo Chiat and Amber road district for example. In that small area, there is The Shore Residences, Silversea, The Meyerise amongst other older properties. And in the up-and-coming Punggol and Sengkang regions, there is a good mix of ECs and private condominiums such as A Treasure Trove, The Luxurie and the latest launch of Bellewaters. It could very well be the battle between the new and newer in time to come as many new homes are erected in already-new clusters of private homes.

Private resale homes – Dip in sales volume and prices continue

The number of resale transactions of private properties have dipped across the board and that in turn has affected the pricing index reflected by the SRPI (Singapore Residential Property Index). SRPI figures showed a 0.7 per cent drop in September, despite hopes that the market will rebound after the Hungry Ghost Festival.

STeven SuitesProperty analysts are reporting an imbalance in the expectations of home sellers and buyers. Stronger holding power of home sellers have meant that fewer properties were exchanging hands and they have instead opted to hold on to their properties till the market turns around. With the exception of shoebox apartments it seems. There was a price gain there of 0.4 per cent. This could be a clear indication of the preferences of buyers in the current market situation and perhaps provides an inkling of the months ahead.

One of the most affected property sectors are the luxury homes. Although buyers and investors of these high-end properties may not be detoured by the additional levies and loan limits, they may be deterred by the buying restrictions. And as the number of unsold luxury properties increases, developers are now offering discounts to entice them back into the fold.

As 2014 draws to an end, many may be wondering how the property market will fare in 2015. As the government has recently announced that the property cooling measures are not likely to ease in the near future, property analysts are expecting a 8 to 10 per cent decline. What will that mean for the overall market and will any particular property type stand out? Will the drop in private home prices mean a similar drop in HDB resale flat prices or will the demand for resale flats rise as more turn towards this less expensive option?

Housing supply to slow down in 2015

The authorities have announced that public housing supply and land sales will slow down come 2015 as the market has showed signs of cooling and stablising after the many rounds of property cooling measures rolled out over the past year or two.

West Terra HDB Bukit BatokPhoto Credit: HDB

The Minister for National Development, Mr Khaw Boon Wan, has commented in a blog post that the supply of new HDB flats will slow by 25 per cent next year. There will only be 4 launches next year, compared to the usual 6 per year. Each launch usually puts out up to 4,000 new Build-to-order (BTO) flats. The rate of successful BTO flat applications has been on the rise as reflected in the few recent launches. More married couples achieve success in getting their new flats, and the authorities have been allowances for couples either opting to apply for a flat with their parents, or for one near their parents. In addition, parents who opt to apply for a flat in a non-mature estate to be near their married children, will also receive priority.

The slight shift in policies may ensure that families remain close-knit and are able to receive help when needed. It may also help with a shift in aging mature estates and introduce a more age-balanced population per HDB estate. Mr Khaw Boon Wan also hopes that the move will help newlyweds plan for a family more efficiently and in turn increase Singapore’s population with a higher birth rate.

In the private property sector, the number of land plots being sold for executive condominiums and private apartments has already been reduced this year, though the industry might see a further reduction come 2015. But will this mean a decline in the building, construction and property industries? Or has the previous land sales and launches been sufficient to keep the industry going for the next few years? Which part of the cycle is the property sector in at the moment and are we set for a boom or lull in the next year?

New life at Jurong Lake district

We’ve all heard about the various prestigious “Lake districts” of popular cities across the globe. Now, Singapore could finally boast a few of their own as waterfront living takes on a whole new spin. Sentosa Cove, Marina Bay, Punggol waterway and now Jurong Lake.

Lake Life ECAt the Lake Life EC (executive condominium) in the Jurong Lake district, almost 1,200 applications were registered when it was launched 2 weekends ago. And with one in three applicants being a first-time home buyer, it shows the demand for and power of these hybrid properties. An EC is sold under the HDB scheme but after 10 years, it becomes private property, making it value for money in the long run.

Though EC buyers may qualify for the HDB grants and subsidies, it largely depends on their income ceiling, which has been raised to $12,000 per household. Prices of these flats are also considerably higher than other HDB flats, new and resale.

As the price gap between private homes in the city centre and city fringe continue to narrow, and as suburban private properties rise in price, ECs may become the property of choice for growing households and young couples. How the scale tips may eventually affect the effectiveness and purpose of this hybrid property. Are ECs here to stay? Or could they possibly become obsolete?