Private resale property market to cruise on status quo

2016 proved to be a roller coaster year for the private home market, as prices fluctuated throughout the year but never quite settled into an upward swing. Price increases lasted hardly a quarter before turning the opposite direction and movements differed between regions as well.

SeletarParkResidencesAcross the board, resale private home prices rose 0.1 per cent. Most of the increase were for properties in the prime districts. Prices here rose 1.8 per cent while falling 0.9 per cent and 0.4 per cent in the city fringe and suburban districts respectively. Location continues to rule buyers’ decision-making process and prime district home prices remained stable despite the year-end lack of market activity.

As the rental market continues to wane and competition from completed properties put further pressure on rental prices, more private condominium unit owners may be pushed to sell this year as they come to the end of their 4-year holding period, after which they will have to foot their sellers’ stamp-duty bill. Buyers of resale units could have the upper hand when it comes to negotiations in these cases.

NathanResidencesThe number of private apartment units sold have been falling as well, with 484 units sold as compared to the 618 sold in November. Though the numbers are higher than the 453 units sold in December 2015, it is still a far cry from the 2,050 in April 2010 – a 76.3 per cent fall in fact. Property analysts are expecting prices and sales volume to maintain their current levels, though 2017 could be more a year of keeping the status quo than quick recovery.

Status quo for landed property market this year

Though figures from the last quarter indicated that landed home prices have risen 0.9 per cent, that was following a 2.7 per cent fall in Q3. Property analysts are careful not to yet call it a market rebound as 2017 may pose a difficult year for the economy.

bishopsgateThe landed housing market may continue to feel the pressure this year as cooling measures remain and the economic outlook seems uncertain. In a year-on-year comparison with Q3 of 2013, prices have fallen 14.8 per cent. Overall landed home prices fell 4.4 per cent last year and 4.1 per cent in 2015. The lowered prices could however have been a factor in bringing buyers back. Should sales volume and landed home prices continue to stabilise, the price index may inch up albeit gradually.

There were several considerable transactions in the detached landed house segment and this could have boosted numbers in Q4. One notable sale was for a property in Bishopsgate, at $26.8 million and a couple of others in Holland Park and White House Park at $25.5 million each. Though the Total Debt Servicing Ratio (TDSR) framework implemented in 2013 has limited buyers for private properties across the board, it has more effect on the higher-priced property segments as investors here may have more financial commitments.

whitehouseparkDespite a muted landed housing market last and possibly this year, landed homes remain much sough-after and investors in these segments may be bolder in their attempts to close deals this year.

Will property market bottom out soon?

Hopes of a market rebound may be reignited as the bottom of the cycle seems to be in close reach. While private home prices have fallen by 0.4% for the 13th consecutive quarter, the rate of decline of private home prices have been reduced from the 1.5% in 2016’s Q3.

cairnhillresidencesIn 2016, private home prices fell only 3%, the slowest since 2013. Since the third quarter of 2013, home prices have fallen 11.2%, with a 4% fall in 2014 followed by a 3.75% fall in 2013. The projected fall in home value this year is 2% to 3%. While home seekers and investors may be drawn back into the market with the lowered property prices, analysts are not expecting them to splurge.

highlandresidencesIn Q4 of 2016, non-landed private home prices fell 0.7 per cent, led by city fringe properties with a 2 per cent drop. Prices of units in the core central region remained unchanged while suburban home prices fell 0.3 per cent. Units in the core central region have suffered a 1.9 per cent fall in Q3, thus the fact that sales volume have increased while prices remained unchanged could be a good sign for the year ahead.

Landed property prices posted a surprising rise of 0.9 per cent after a 2.7 per cent fall in Q3 while in the resale HDB flat market, prices fell 0.1 per cent.

Continued decline of private resale condo prices expected

2017 has arrived and the question on every property owner, seeker and investor’s mind may be how the year will fare for them. Will interest rates rise and how will that affect their financial sustainability? Will vacancy rate fall and will there be an increase in resale units hence affecting price competitiveness?

casabellaThe last couple of months of 2016 has shown a continued decrease in resale condo prices. In November, overall resale condominium prices have fallen 0.7 per cent, following a 0.2 per cent in October from September. While central region private non-landed residential properties have regained some favour with foreign buyers, prices have dipped despite a rise in sales volume. Property analysts are expecting a market stagnation at best for 2017 as a quick rebound seems unlikely due to the continued slow economic growth and global political uncertainty.

The increase in sales volume is however a sign of hope for the property sector, as the rate of price decline may cease after a period of increased activity. Most sellers who are listing their units under the current market conditions are more likely than not serious sellers as most investors will try to hold on to their units and tide over the market lull. Thus buyers are increasingly aware of this change in tide and are negotiating for lower prices.

seletar-springsThe segment most affected could be the small suburban condominium apartments as the number of resale units are on the rise and also facing competition from HDB flats. While official figures are yet to be computed, analysts are expecting private property prices to have fallen by approximately 3.5 per cent last year.

Will current property bright spots continue to shine in 2017?

Private home prices have continued to fall in 2016, and while that may have coloured the market atmosphere somewhat grey, bright spots are beginning to shine through the gloom, with 3 sectors performing particularly well this year.

Miro condo on Lincoln Road, just off Novena at the City Fringe districts.

Miro condo on Lincoln Road, just off Novena in the city fringe.

The luxury residential property, commercial office and collective sales segments have all shone this year. And industry players are no doubt hoping that the positive streak will continue in 2017. In this year alone, 3 en bloc sales were closed. Only 1 such transaction was recorded for 2015 and none in 2014. Even for the private home market, sales volume has risen 9.8 per cent this year despite 10.8 and 10.7 per cent fall respectively in sale prices and rents in 12 consecutive quarters.

Some property analysts however consider the fall in property prices a good thing, as this has enticed more buyers back into the market. Buyers who may have previously stayed away from the market due to the increased stamp duties and fees implemented by the authorities in the past few years to attempt to cool the market, have now returned and are now swiftly closing transactions.

2 RVG condo apartment in River Valley

2 RVG condo apartment in River Valley

In the prime districts of 9, 10 and 11, private home transactions were already 42.6 per cent higher than the total in 2015. 2,601 deals were sealed in the Orchard, River Valley, Bukit Timah and Novena areas as of mid-December. With more land allocated under the Government Land Sales (GLS) scheme and developers on the lookout for smaller prime location sites, the market may see a lot more activity quite soon.

New private home sales figures on track for H4

Though there was a 31.4% fall from October’s record sales of 1,253 units, the year is nevertheless set to end on a cheerful note, as spirits in the new private home market are buoyed by a 13.3% year-on-year spike last month with developers selling 860 units in November alone (excluding the 250 new executive condominium units sold). The fourth quarter has clocked a 2,500-unit sales figure thus far and property analysts say the projected market figures are are on track as the year-end is usually a quieter time for the property sector.

parcriviera2Even before numbers for December are consolidated, the number of new homes sold this year have already crossed 7,769, which is already more than the total of 7,440 homes sold last year. The lowered private property prices have attracted a considerable market audience, with most going for units with lower quantum prices. Most buyers are hoping to score a good deal before prices bounce back up, and have shown interest in smaller one- and two-bedders. The demand for larger units are slightly lacking in comparison.

queenspeak2Units at the newly launched Queens Peak condominium development in Queenstown and Parc Riviera in West Coast Vale were the month’s best sellers. Most of the units sold were priced under $1 million with 185 such units sold at Queens Peak and 110 of the sme at Parc Riviera. A positive outlook on the private home market next year seems likely with a projected 8,000 number of new homes sold by end of 2016.

China’s property explosion slows only slightly

There has been fear of a bubble growing in China’s property market but as property prices fell  in some of China’s top and second-tier cities this month, the fears may be slightly allayed as it seems to indicate that the curbs which authorities have put in place are starting to work.

Property analysts have however reported a change in focus for some mainland buyers to Hong Kong as skyrocketing property prices and cooling measures put some off.

HongKong The AltitudeThe property market in China is one of the country’s main source of revenue growth, and while the authorities may want to prevent a bubble from bursting, they are also put to task to keep the economy alive. China’s economic growth of 6.7 per cent in Q3 was largely dependent on its real estate industry. Recent curbs include larger down payments and restrictions on multiple property ownerships. But the low interest rates offered by China banks have kept the buyers coming. Though the rates have remained unchanged since October 2015, it has been cut 6 times prior.

While new home prices in Beijing fell 3.7 per cent and 2.5 per cent in Shanghai, some may consider this a market cooling. But the average new home prices across 70 cities have shown a record surge last month, the highest in 7 years, with a 1.8 per cent rise from August.

 

2016’s demand for properties level with last year’s

Though it may seem like the property market took a turn for the worse this year, figures have shown that the level of demand has remained similar to last year’s.

peak-cairnhillProperty prices have fallen 10.8 per cent since the 2013 peak and perhaps it is precisely this decline of home prices that have kept buyers coming to the table, more so this year than the previous few which have been dull partly due to the property cooling measures implemented since 2013. Some property agents have in fact reported up to a 50 per cent increase in sealed deals this year, indicative of increased buyer’s interest and number of project launches.

The market inertia in terms of the property cooling measures and interest rates may also have been push factors in enticing buyers back into the market. Resale property sales have been strong with 5,587 transactions closed in the first 3 quarters of this year, up 18 per cent from 2015. Developers have also been pricing new units more competitively this year, giving the resale market a run for their money.

the-crestCity fringe and central region resale properties were particularly popular with buyers though some may still be waiting for better deals.  And as property analysts predict a further 3 to 3.5 per cent drop in prices for the rest of the year, the market seems primed for owner-occupiers though those considering investing in properties should wait a little more to get the most out of their buck.