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16 May

New Homes sales halved

New properties rode the big wave earlier this year in the first quarter. Now, the tide has brought them back on the ground.

Sant Ritz near Potong Pasir MRT station.

Sant Ritz near Potong Pasir MRT station.

But the reason may not be because the fish are not biting. There are simply fewer launches in April. Although new home sales saw a spike in March, industry analysts are putting it down to pent-up demand following January’s cooling measures. Are April’s numbers more reflective of the actual effect of the property curbs? As the heat from Q1′s fever dies down, home buyers who are shopping for a home may be holding back in wait of potential launches in the coming months.

The most recent launches were Sant Ritz in Potong Pasir , Jade Residences in Upper Serangoon, Cosmoloft in Balestier and The Siena at Farrer Road. Data from the Urban Redevelopment Authority (URA) indicated 104 units sold at the 214-unit Sant Ritz, at an average of $1,494 psf. At Jade Residences, buyers snapped up nearly half of the 171 units at a medai of $1, 592 psf.

cosmoloftBuyers are becoming more savvy, and are increasingly not only drawn by a property’s location but also design and potential investment value. Do buyers now have the upper hand and will developers be pressed to lower selling prices? CBRE executive director of residnetial Joseph Tan believes that buyers now draw the line at properties ranging between $900 to $1, 600 psf. Properties selling above that price line may not see as many takers. For now.

Deputy Prime Minister Tharman Shanmugaratnam’s statement last month which spoke to the unlikelihood of more cooling measures could also mean buyers are now in less of a hurry to buy up properties and can well afford to play the waiting game. It may seem like a supply glut could be near, but as soon as population increases, and depending on how fast a rate, demand will soon rise as well. Is it better to buy now than to wait for prices to drop?

Upcoming launches include KAP Residences at King Albert Part, Corals at Keppel Bay, Liv on Sophia near Dhoby Ghaut MRT station and Stratum in Pasir Ris.

14 May

Singapore’s Luxury home prices remain stable

In most countries across Asia, high-end properties are seeing a considerable rise in prices. Only in Singapore and Hong kong, where property cooling measures were implemented, did prices remain stable.

While luxury homes here saw a 0.6 per cent dip in prices, in other major Asia cities such as Beijing, Shanghai, Bangkok, Kuala Lumpur, Manila, Jakarta and Mumbai, prices leaped an average of 6.1 per cent year on year. Singapore is the only city where year on year high-end home prices fell, at 4.3 per cent.

Corals at Keppel Bay.

Corals at Keppel Bay.

Which city saw the largest jump in luxury property prices? Jakarta – with an increase of 8.7 per cent in Q1, that is a whooping 32.9 per cent year on year. Kuala Lumpur and Beijing saw steady quarterly rise in property prices as well. But it is worth noting that the Chinese government is quite aware of a possible property bubble and may be clamping down on building and investments soon. Jones Lang LaSalle‘s head of Asia Pacific research, Ms Jane Murray, is predicting a fall of up to 5 per cent for high-end property here in SIngapore. As population and economic growth slows, the same is expected of the property market.

Have investors veered away from Singapore properties to focus on real estate  elsewhere in Asia and are Singaporean investors doing the same? As property cooling measures continue to kick in, will they deter home buyers even further? What will it mean for Singapore’s real estate market and is this the intended purpose of the property cooling measures?

7 May

Property curbs brought in revenue

What did all the previous rounds of property cooling measures bring to the table?

$1 billion. In tax revenue.

Financing Your HomeFollowing January’s new Additional Buyer’s Stamp Duty (ABSD) hikes, in February and March $158 million were added to the taxman’s coffers. The ABSD is now up to 15 per cent. $580 million came from foreign buyers, were 3, 041 homes were sold since December 2011. Singaporeans and Permanent Residents (PRs) forked out $386 million for 7,269 homes. ABSD was introduced in 2010, and since then, home owners have paid up a total of $66.6 million of this levy.

Foreign home buyers have retreated somewhat, with a 36 per cent drop from last year. The ABSD currently stands at:

  • 15 per cent for foreign buyers
  • 5 to 10 per cent for Singaporeans and PRs
Starlight Suites condominium.

Starlight Suites condominium.

Since new home sales have continued to push on, strongly, despite the measures, the ABSD may not have entirely been a deterrent nor an aid to managing home prices. Property developers are also helping to bolster the market by providing discounts, rebates and other incentives to home buyers.

Many buyers are willing to suffer a little now and buy when they can, rather than wait for something that may or may not happen. As the population continues to grow, they are perhaps preemptive of the future where rental could be a considerable means of income and should homes become out of reach for their children.

3 Apr

Fringe growth for City fringe homes

In terms of speed, the property cooling measures have certainly put the brakes on the growth of city fringe private apartments. Investors are not coming to the buffet table of apartments in areas such as Balestier, Thomson, Outram and Rochor, despite the substantial number of choice units for the picking.

Echelon condominium.

Echelon condominium.

The Urban Redevelopment Authority data indicated zero growth in the non-landed home prices for city fringe areas. City centre apartments on the other hand has increased by a slight 0.4 per cent. The higher stamp duty and tighter home loan limits have detracted many a property investor. In fact, growth in this sector in particular has be flattening since April 2012.

Spottiswoode SuitesSLP International’s head of research, Mr Nicholas Mak, thinks that part of the reason for the flat-lining sales could be that recent launches have been targeted at investors. These include Echelon near Redhill MRT station, Seasuites in Pasir Panjang and Spottiswoode Suites near Outram Park MRT station. Projects such as these has a significant number of one and two-bedders, which have been the hot favourites of real estate investors for sometime.

Have residential home prices in this area reached a saturation point and what will it take to get the buyers back into the market? Will there be spillover interest from the suburban private home market which is doing exceedingly well for the moment?

6 Mar

Suburban location but Prime rental prices.

Even though these apartments and flats are not in the prime central locations, they are holding their own in terms of home rental prices.

Yishun Emerald condominium.

Yishun Emerald condominium.

Mass market private condominiums, especially those in the East and North-east districts are in demand and thus driving prices up. Median monthly rents rose 2.9 per cent to $3.13 psf in Q4 of 2012. And as expected, homes close to MRT stations and near international schools fair better with tenants. And smaller homes, because of their higher psf prices, faired exceedingly well. Apartments in District 28 (Yio Chu Kang and Seletar), have been rising particularly fast to the current $3, 400 per month. Homes in District 21 and 19 performed equally well.

Smaller-size units, and perhaps shoebox apartments, were the top sellers in January and from the way more HBD upgraders are snapping up units here, they may be this year’s hot property. With the government’s tightening noose on immigration policies, HDB flat rentals may suffer first, since new immigrants will tend to fall in the PMEB category of professionals, managers, executives and technicians and their families. Singles looking to venture into the property market also make up a large part of the pool of suburban small apartment buyers.

Savills Singapore reseach head Alan Cheong has observed that most renters have a budget of $2500 to $4000 per month and suburban shoebox units or three-bedders fit right into their wallets. Older apartments with a larger floor space may be priced at the same range as newer but smaller flats.

20 Feb

Even fewer resale HDB Flats on the market?

Could this be the case, since recent reports indicate that more HDB owners are holding on to their flats, even after the minimum occupation period (MOP) is up? Four years ago, the opposite was apparent, with resale HDB flats selling like hotcakes. Data from the Housing Board released over the weekend showed that the percentage of home owners who sold their property within the year after the 5-year minimum occupation period had risen from 4.3 per cent in 2008 to 18.3 per cent in 2011 but has dropped to 11.8 per cent last year.

HDB flats

Although more than double of the figure in 2008′s, it shows that the trend of investing in HDB flats may be waning. But one of the reasons this could be happening, is that HDB owners are expecting resale HDB flat prices to appreciate even further, possibly even outpacing that of private properties. In 2012, resale HDB flat prices have risen 6.6 per cent, while private property prices rose 2.8 per cent.

With the Housing Board promising to build more new BTO flats within the next few years, are these HDB owners wishing for more than they can bite? Some HDB owners feel that if they sell high, then they would have to buy high, especially since private properties of the same size in the same locations may be priced out of their range, at least for now.

Oleander Breeze BTO Flat in Yishun.

Oleander Breeze BTO Flat in Yishun. Photo by HDB.

Restrictions put in place by the authorities on selling a flat, could also have deterred some from acting on their plans to sell. Most are concerned that once they sell their HDB flat,  it may not be as easy to get back into the public housing market, especially since once you own a private property, you have to sell it before you can buy a HDB flat. Whereas if you own a HDB flat, once you have fulfilled the minimum occupation period, you can then purchase an additional private property and own both at the same time. These are the rules for now, but as the population grows, they may change and it is very much dependent on the global as well as national changes. For the moment, more are likely to keep their existing HDB flats and rent out instead.

13 Feb

Developers Price Cuts – Fair?

Not everyone may be happy with the new moves property developers have been exhibiting of late. These include the government and also early home buyers. For one, they push the prices of properties up unnaturally and this in turn affects the home financing aspect of property buying, and earlier buyers may also see red at losing out on the discounts offered later on.

The Interlace private condo apartments on Depot Road.

The Interlace private condo apartments on Depot Road.

Developers however offer up the argument that later buyers often miss out on choosing the better units in the project, and thus waiting for discounts may not necessarily be beneficial. Recent price cuts could have come about because of concerns that housing supply scale could tip in favour of buyers. The Interlace, d’Leedon and eCo were among some of the latest private properties which offered up discounts of up to 15 per cent.

In fact, as voiced by a CapitaLand spokesperson, some earlier buyers were able to enjoy most attractive pricing as they paid lower stamp duties and had higher loan quantums. They also got to choose from the choicer units offered in early launches, which might mean a better value on their property in future. Also, prices at later launches rarely precede that of the earlier ones, as prices tend to inch upwards as supply within a project becomes tighter after more units are sold. Competition may be higher and buyers may offer higher prices if they truly wish to purchase a unit.

7 Feb

Property developers discounts may be cut

If you’re waiting to see if the developer of your property of choice might dangle discounts to counter the recent cooling measures, you might have to reconsider. The authorities have caught on to property developers‘ tactics of offering discounts as a means to entice customers to buy new properties, especially since the cooling measures have taken a huge chunk out of the business.
House

But fear not, only the indirect discounts are under review by the Urban Redevelopment Authority. These mostly refer to the rebates and vouchers that the buyer receives only after purchasing the property. Since these are not reflected in the upfront price which the buyer pays, it may make the cooling measures seem ineffective, which also means URA’s quarterly price index based on caveats lodged might not be a true reflection of the market situation.

Property developers on the other hand tend to lean towards indirect discounts as this helps placate early buyers who may not be happy that they had gotten the raw end of the deal. Keeping the upfront price high also helps to keep prices high all around.

Other ways which developers have been trying to help buyers out are through the partial or full absorption of the Additional Buyers Stamp Duty (ABSD) which has been increased in the most recent round of measures. The frequency and fervency of this practice might be what the authorities are watching as it negates the effect of the property measures.

Another concern is also that the true value of the property needs to be conveyed truthfully to the home buyer, but with the discounts and cuts, it might not be the case and it might only confuse consumers. Not forgetting that home loans are based on the property value, thus might buyers be paying more in the end through bank loan interests for a higher priced property?

So are the cooling measures truly working? If it seems that discounts are offered more frequently, then it might be.

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