Private home sales – Will the decline continue?

The property market has been softening. The decline seemed inevitable, especially as completed new private homes flood the market in the upcoming year or two.

Not surprisingly, shoebox apartments saw the largest dip in sales as the number of units are somewhat saturated. Buying power is also now lower and buyers who were initially looking at these units for investment may no longer be able to get the loans they need.

 

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Rental issues such as the age, functionality and location of resale units now have to compete with the newer and sometimes faster property models. In the central districts, the decline in rents and sales of apartments were most evident. This could be due to the number of unsold high-end properties in these areas. Even suburban condominiums are feeling the heat as many expatriates shun them as they often do not provide the convenience and exclusivity they desire.

Whether the effect will transfer to the HDB resale market also awaits to be seen. As HDB upgraders who are moving to their completed units will have to let go of their HDB units within a specified time period, many may be in a hurry to let go of their units and possibly at lower prices than before as the market gets competitive. Pair this up with a diminishing market for smaller units as singles are now able to purchase new flats from HDB directly, as well as a smaller pool of permanent residents, the property market seems to be in for quite the turn this year.

Even as more new property launches are promised, how private home sales fare the next quarter may set the mood for the rest of the year.

Home prices down all around

Landed. Non-landed. Private. Public. Across the board, prices of all residential properties seem to have taken a hit in the last quarter.

Prices have dipped, some sectors more than the others, but signs are pointing to a possible slowdown in the market due to governmental curbs and the increased number of new property launches over the last 2 years. With the last price decline registered in 2005, resale HDB flat prices have been on the downhill slope for 2 quarters now. Private property prices have also suffered albeit to a lesser degree, with the lowest prices since 2009.

Mon JervoisMight it truly be the buyers’ market this year? Will this prompt more buyers to jump on the opportunity or are there other factors which might keep them away from the cash register? The tighter loan restrictions such as shorter loan periods, lower debt-to-income limits, and higher stamp duties may still be an obstacle to some buyers, thus sellers eager to cash in on their properties may find themselves having to wait a little longer for a good deal to come by.

Location usually still trumps all, though considerations such as space, amenities and living environment all have a part to play in the final selling price. With more new private condominium launches and new HDB flats pushing their way into the market this year, competition on the rental front is proving tough as well. Buyers now have more options for comparison and may be tempted to wait for prices to drop even further or wait it out for the best deal.

Even prices of suburban private homes, which have been the main stalwart of the property market last half of the year, have slipped 0.6 per cent. And as resale HDB flat prices drop, so have the number of HDB upgraders who may require the cash from the sale of their flats to purchase private homes. In turn, demand for mass-market suburban homes may fall.

Will it be a sombre year for Singapore’s residential property market?

2013 closed with weak demand for resale homes

Although a 0.1% rise was registered, the last quarter of last year saw a resale private home market which was relatively quiet, and where demand was low. But industry experts were none too ecstatic about the rise, with most recognizing that this might be a mere “technical rebound” which will not be sustained.

The Montana1Homes in the central region which sold above the median market prices could have accounted for this rise in numbers. A few units at The Montana in Jalan Mutiara for example, sold at $1, 832 to $2, 130 psf. The market prices were at an average of $1, 600 to $1, 800 psf. Another high-floor unit at The Orchard Residences also went at $4, 312 psf, above the $3,600 psf market price, possibly due to the rarity of the unit.

The largest dip came from the shoebox apartments sector. For these small apartments of less than 500 sq ft, which were the best sellers of earlier in the year, a 0.6 per cent drop could signify a saturation of the market with these types of units, and where rental demand may not yet make up for the sheer number in existence. As new non-landed residential developments flaunt their remaining units, resale units in the suburbs may be forced to lower seller expectations. Will 2013 purely be a buyers’ market?

Geylang East shines brightly for property investors

Saying “Geylang” is almost the same as saying “Red light district”. But as infamous as the area is, for its various night-time activities as  as good food, properties at its fringes are also becoming the favourites of savvy investors. Its accessibility to both the Paya Lebar commercial and industrial areas and the city centre has placed Geylang East in the spotlight, but for all the right reasons.

Surrounded by small apartment blocks, shophouses and boutique hotels, the area is plump for the picking of property developers hoping to add new private homes to the district. The fresh and continuous supply of workers in the neighbouring commercial centres looking for homes to rent will provide investors with positive rental yields.

Grandview SuitesThe latest land sale of a 99-year leasehold residential plot near the Aljunied MRT station could be indicative of 215 new homes. Recent launches in the area include Grandview suites in Lorong 22, The Centren in Lorong 27, The Octet and #1 Loft. Most are smaller condominium developments with less than 60 units each. Average selling prices are between $1, 184 psf to $1,300 psf. Guillemard Suites is one of the larger establishments with 146 units and its freehold status makes it popular with investors even long after its launch a couple of years back.

Industry analysts said the median capital values for homes in Geylang have risen across the board over the past 3 years and are likely to continue its climb as Singapore’s urban and commercial landscape looks set for a major revamp and regeneration over the next 5 to 10 years.

Banking on shoeboxes

Shoebox apartments. Property developers are cooking up more of these as they are clearly the quick and sure money-makers in this day and age.

For these small private condominium units usually under 500 sq ft, the total price quantum is much lower and more palatable for the standard buyer looking to invest. It is also easy to manage mortgage payments. Another way developers keep prices affordable is to forego engaging award-winning designers. Practicality trumps in the current market. Take Sky Vue by CapitaLand for example, unlike the nearby Sky Habitat which is designed by a world-renowned architect Moshe Safdie who is also the brains behind the design of the Marina Bay Sands, this new condo project is designed by local firm, DCA Architects.

Sky Habitat condominium in Bishan. Are prices here comparable to units in the Orchard belt?

Sky Habitat condominium in Bishan.

Average home sizes in Singapore are being constantly, and growing smaller as the population density increases with a growing overall population. At Sky Vue, the smallest unit stands at 710 sq ft, which is already bigger than some of the tiny shoebox units out there. This could be a compromise between CapitaLand’s previous stand of not building shoebox apartments and the current market situation where exorbitant land prices are pushing developers to think of ways to make the most out of their purchase.

The Interlace private condo apartments on Depot Road.

The Interlace private condo apartments on Depot Road.

Whether these recent moves are a reaction to poorly home sales caused by property cooling measures of simply a reflex action as inflation and increasing land prices take lead, property developers are quick at finding ways to get around the problem. Some have offered discounted prices for unsold units, for example at d’Leedon, The Interlace and even the popular Sky Habitat.

The market’s reaction in this last quarter of the year will be interesting and may just be an indication of how the real estate sector next year will fare.

Property Action heats up in District 20

First there was Thomson Three. Which sold 160 units sold within the first day of its launch last week.

Now there’s Sky Vue in Bishan. And by the number of agents handing out flyers in the Bishan and Ang Mo Kio areas alone, it will be surprising if the new condominium near the Bishan MRT station and Junction 8 does not receive a more than welcoming response from home buyers.
Sky Vue
Despite being just 15 minutes drive away from each other, Thomson Three and Sky Vue are about just as far apart in its unique selling points as night and day. Both are condominium developments but Thomson Three also has 10 semi-detached strata housing units in its midsts and is situated near landed homes in a mainly residential area.

The much larger Sky Vue has 694 units as compared to Thomson Three’s 445 units. And it will stand in the highly populated Bishan Street 14, putting it very close to well-developed transport nodes such as the Bishan MRT station, bus interchange and other amenities such as Junction 8 shopping mall, CPF building, the Bishan Library and other established education institutions such as Raffles Institution and Catholic High.

Thomson Three 1Thomson Three may be just that little bit behind in that the Thomson Line will only be ready in 2020. But it does promise a more exclusive, relaxed and nature-loving environment being near the MacRitchie and Pierce reservoirs. It also doesn’t lack behind with St. Nicholas Girls’ school and Ai Tong Primary school nearby.

On a price comparison, Sky Vue units are costing $1, 380 psf on the average and units at Thomson Three are going for $1, 550 psf. Bigger apartments at Thomson Three however may have higher psf prices. A two-bedder at Sky Vue goes for $852, 000 while the same at Thomson Three starts at $945, 000. With both these areas becoming more popular with expatriates looking out of the central and town areas for rental options, private properties old and perhaps especially new, may benefit.

Home buyers get more time to decide

It used to be, see the showflat, book a flat, pay a deposit all within a day or two. Or otherwise miss your chance altogether, what with so many buyers competing for the same unit.

THE Quinn

But now, it seems developers are lengthening their preview launch periods to allow buyers more time to work out their sums before their big commitment. All this in reaction to the recent restrictions on loans, which may have caused buyers to be more cautious about how much they can afford and how much of a loan they can actually receive. Mental sums may not cut it, and developers are making certain that marketing agents are readily at hand to provide assistance and information, even going as far as to provide a “thinking corner” which is free from the pressure of agents to allow buyers a quiet space to consider their potential purchases.

The Tembusu condominium for example was launched only on 13 August, but two weeks before the official launch date, showflats were already open and available for viewing but not purchases. Buyers could have the luxury of time to browse and consider whether their budget matched the indicative pricing. It also allows for a more thorough research and comparison of short and long-term goals and financial considerations.

The MaisonsBanks are also held to the new total debt servicing ratio (TDSR) rules when calculating property buyers’ loan applications, thus the approval waiting period is also longer. It used to take three days to process an application, but now it could take up to a week.
At The Quinn and The Maisons private apartments, buyers not get two days leeway to think things through when previously a blank cheque is required as an expression of interest should they wish to reserve a unit. This has certainly tipped the scale towards buyers as they now have more time to contemplate their purchases and there might be a higher chance of rejection for the developers. How will this affect the overall private property prices?

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?