Varied market response to declining property prices

Home prices in both the private and resale HDB markets have continued to dip in the second quarter of 2014. In the first three months of the year, the decline was 1.6 per cent. Perhaps buoyed by the increased number of launched in Q2, the rate of decline was somewhat less steep at 1.3 per cent the quarter past.

Rezi 3 TwoBuyers who have been on the lookout for opportunities such as this may be happy to find that more than a few property developments have been offering discounts. Though the overall number of sales have picked up in the second quarter, mostly due to new launches, the private homes market saw a more obvious slowdown in both the city centre and suburbs. The drop was 1.5 per cent in the city centre and 1.1 per cent in the suburbs. Properties in the city fringe fared better with a 0.6 per cent drop, an improvement considering the 3.3 per cent dive in the earlier part of the year.

But there are those who are concerned about the longevity of their investment should they purchase now. The question they may ask is, is this the lowest prices can go? If I were to buy now, will the prices continue to drop? Though property analysts are doubtful that the prices will bottom out anytime soon, they are expecting the maximum of a 5 per cent decline.

As long as the supply continues at a steady pace, prices will not vary far from the current levels. Perhaps true change will only come with a shift in policies. Considering the elections will be here in a couple of years’ time, the time leading up to that might be a period of uncertainty.

Property launches may trickle

As transaction volume of luxury homes remains below par this year, property developers are holding back on their new launches. The last big launch was in October last year, of the freehold Goodwood Grand and Liv on Wilkie.  There are apparently up to 12 new projects on hold.

The one high-end residential project which went on sale this year was The Rise @ Oxley Residences near Orchard road. So far only 8 units of the 120-unit project has been sold, at a median price of $2,452 psf. Sales have been slow since November last year. Goodwood Grand has sold 22 of its 73 units as of May this year, at a $2,323 psf average. The availability of smaller apartments at Liv on Wilkie has helped with sales as they are more affordable for investors and may have longer legs to run.

The Rise @ OxleyWhat have developers been busy with these few months? Cutting back on their losses by offering discounts on existing stock, it seems. And as some may be in a hurry to sell as deadlines loom, the discounts are more attractive than usually expected of the property market.

But for those who are willing to wait, new projects yet-to-be launched include New Futura in Leonie Hill Road and Gramercy Park on Grange road. Once again the waiting game is being played. And though it was the buyer’s game earlier this year, the ball now remains in mid-air. In whose court will it land?

Paya Lebar thriving area for properties

A largely commercial and industrial area, one would not have thought Paya Lebar would bring much cheer to anyone but the landlords of commercial properties. But the large number of foreign workforce these businesses will bring to the surrounding districts may be something to look forward to.

Katong Regency - Mixed-used development on Tanjong Katong Road.

Katong Regency – Mixed-used development on Tanjong Katong Road.

Slated for sale in the next half of 2014, Paya Lebar Central will see a 132, 000 sq m new building with offices, retails businesses and even a hotel. What now stands on the spot is the Singapore Post Centre amongst other industrial properties. Its proximity to the city centre and its competitive rental rates will no doubt make it one of the more popular commercial districts in the country and residential properties nearby could be looking at positive rental possibilities.

There are a variety of both landed homes and high-rise apartments in Paya Lebar, Joo Chiat, Katong and Marine Parade. Urban Villas is a cluster of private terraces and semi-detached houses which are freehold. In the Katong area, there are Katong Regency, The Lush and Aura 83 condominiums, an area which has been a hive of activity since the opening of many new eateries and shops and also the 112 Katong shopping mall.

The East has never looked so exciting. And we can expect it to be the next big thing in a few years’ time.

Private property buyers holding out on post-launches

New residential developments usually draw large crowds at their previews and initial launches, with some selling out within weeks as eager house hunters scramble for the best units. But buyers are holding back during post-launches, opting instead to wait for newer projects or other post-launches to see which developers offer the best deals. City Developments’ Coco Palms sold only 20 units over the weekend. In its debut, 52 per cent of its 944 units were sold. Prices range from $880,000 for a three-bedder to $1.21 million for four-bedder though units available range from 463 sq ft one-bedders to 3, 111 sq ft penthouses.

Commonwealth TowersSome developers have been dishing considerable discounts on their post-launch offerings. The Panorama in Ang Mo Kio just a couple of weekends ago saw developers giving up to 12 per cent discounts on their second launch. Property hunters are likely to compare between new project launches and previous projects’ re-launches, weighing the potential of rental possibilities and asset appreciation.

The increased number of mass-market property launches in May has lent some joy to the market and transaction volume is expected to reach 1,600 units. Projects which are offering prices lower than the projected buyers’ total quantum will be likely to still get buyers coming to their doorsteps. When it was first launched, units at Waterfront@Faber condominium went for $1, 100 to $1, 350 psf. Since then, only 6 more were sold, at an average of $1, 280 psf. Another May baby was the 845-unit Commonwealth Towers, where more than 66 per cent of the 400 units released have been sold.

As we move into the middle of 2014, the next half will be a time to watch. It may show signs of what 2015 will bring.

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.