Resale property prices slide further

The private property market seems to be going the way property analysts have predicted in the beginning of the year. Over the last 6 months, prices of completed private property have fallen 1.9%. The steepest fall was in the beginning of 2014, at 3.7%. Though the decline has continued, the fall has been lighter in the quarters following.

Maysprings condoSince the implementation of the Total Debt Servicing Ratio (TDSR) in June of 2013, property prices have fallen at varying speeds over the past 2 years. A total of 42,606 new homes are expected to be ready for occupation within these couple of years and up to 96 per cent of the land sold this year are expected for future non-landed homes. It may become a tussle for prices and buyers, between new and resale properties.

As rental demand also continues to dip, prospects for the property market seems to have dimmed slightly, though select properties will still hold potential. Property experts have explained that the dip in prices in the resale market may have been due to the ability of individual to be flexible with prices. New properties which are being sold by developers have the means to stick to their guns in terms of pricing. The scale for rental supply and demand is likely to continue leaning towards the former.

Rental properties face price-pressure

Vacancy rates for private non-landed homes may reach 9.6 per cent by the end of this year, up 1.8 per cent from 7.8 per cent at the end of 2014. Since the beginning of 2013, rental rates have continually fallen on a monthly basis, with the exception of January this year. Property experts are expecting a further fall in rental prices in these next couple of years.

Duchess ResidencesProperty agents have also noticed that tenants are now signing shorter leases of 12 months as opposed to the usual 24 months. Tenants may be on the constant lookout for better deals are may change units more frequently. The number of new private homes have risen exponentially, especially as previously sold units reach completion and are readying themselves for occupation this and next year. This year alone, 21, 800 new units will be completed. That is almost 84 per cent higher than the 11,865 units in the last five years combined.

On the brighter side of things, the volume of rental transactions may remain steady as the tenant pool seems to stay constant albeit an increased likelihood of tenants making their rounds in the rental market. That may also mean a higher number of new leases being signed.

As long as the tenant pool remains the same, and the supply of new private homes continues to rise, the pressure on housing rental prices and eventually sale prices is here to stay.

Property auctions see more action

In light of the declining property market, more properties are finding themselves placed under the hammer at property auctions.

THeWaterlineLowered mortgage ratios, decreasing rental demand and increasing supply have all affected the property market. Most of the 180 units put up for auction in the 3 months up to 30 June have mostly been due to mortgagors defaulting on their mortgage payments. Industrial or residential properties alike have found it difficult to meet their mortgage payments if they were relying mainly on rents, especially as it has become harder to command leases at a level expected during the peak of the market.

Smaller private non-landed units such as studios or shoebox apartments were also facing some market pressure as their popularity waned. Supply of such units, or simply more private condominium apartments in general, has possibly exceeded demand and such units are now more commonplace. The next thing to budge would be rental and then sale prices.

Even as property loans become harder to secure, with the tight loan limits and hefty stamp duties implemented as part of the property cooling measures, the last hurdle that mortgagors have to cross would be the increasing interest rates.

For buyers and property investors, the proper might be a possible avenue to consider in their property search.

Renting out your private condo apartment

Many property owners here rely on property rental to help them with their mortgages and oftentimes, the rental option is regarded as a long-term financial aid. What then should you as a home owner who is looking to rent out your private property or even just a room in your home be watching out for? And as a tenant, do you know what you should or should not do?

DuchessResidencePublic housing or HDB flats fall under the jurisdiction of the Housing Development Board (HDB), which has clear rules and guidelines for property leasing. But private properties are often left to the discretion of the market, tenants and landlords, with some areas which though seemingly grey, should be quite glaringly clear.

What is not allowed?

  • Short-term rentals. Though concepts such as Airbnb have been around for sometime, it sadly may not yet work within Singapore’s legislative system for property rentals. URA’s lease and subletting rules currently states that rentals need to fulfil certain requirements, with the time period being a minimum of 6 months.
  • Partitioning of a unit into smaller units. It is not uncommon to find landlords or sometimes a master tenant putting up false walls or partitions in order to sublet the unit.  The maximum number of residents in a private residential property is 8, regardless of the size of the property.
  • Leasing to tenants without proper papers. Landlords should always make it a point to check and keep a copy of the tenants’ passport and work permits or employment passes as the onus is on the owner of the unit to ensure that the unit is rented only to legal workers. A quick check on the ICA website will allow you to verify your tenants’ validity and authenticity.
  • Subletting of properties by master tenants. As landlords of a property, always be vigilant and do frequent checks on your property to ensure the clauses in your tenancy agreements are not flouted.

And for tenants, be aware that your landlord should pay for the condominium’s maintenance fees. For both sides, a reliable agent who will be able to advise and help you with the proper paperwork and help your keep a lookout for blind spots is an invaluable asset.

 

 

Rising competition in the Rental market

If you were looking to buy a condominium unit to call home, competition from the rising number of new homes might be good news for you. But if you were looking to invest in a unit to reap rental profits, it might be wise to consider your options carefully.

Jupiter18 CondoThe rental market for suburban condominiums has been falling, especially as more new properties enter the market. Private condominium rentals have fallen 0.6 per cent last month and is 6 per cent lower than last May on a year-on-year comparison. More new condominiums will receive their TOP (temporary occupation permits) in the next few months, which may suppress the rental market even more. Property analysts are expecting a fall of up to 7 per cent for the private property rental market this year.

The effects may also trickle down to the HDB rental market as competition heats up across the board. The price gap may be narrowing between HDB and private apartment rents, thus giving tenants a much wider pool of options. A five-bedroom HDB flat now usually rents for up to $2,400 per month while a 2-bedder private condo unit rents at just under $3,000.

Location is still king and units in mature estates or near MRT stations will still command slightly higher rents.

Are resale home prices stabilising?

After January’s dip in resale private property prices, February’s fall was considered slightly more positive. It was less steep for one, at 0.3 per cent as compared to January’s 0.9 per cent. Buyers have been waiting around for prices to slide further, but they seemed to have held firm. The prediction for January’s fall was originally 1.6 per cent.

Tre ResidencesLuxury homes took the brunt of the hit, with those in the city centre suffering an obvious softening demand. Suburban home sales remained level. Some of the market movements could be due to the lack of new property launches in February and the lack of activity during the festive Chinese New Year period.

Prices of shoebox apartments have been uncertain of late, as more have been completed are are now ready for the rental market. This in turn may have implications for the latter as competition runs high. Tenants now have fresh pickings to choose from and may have the upper hand when it comes to price negotiations.

In the months ahead, buyers and investors can expect a slight market shift, but not necessarily a significant one. It will be constant cha-cha between buyers and sellers and they try to suss out the other’s expectations.

Property market cooling in Malaysia as well?

Singapore aside, it seems the property market is cooling just across the border as well.

Similarly, higher interest rates are expected for the year ahead, and with weaker buying sentiments and a possible market saturation, property experts are saying that the property developers’ expectations and pricing will be the main factor determining a slowdown (or not) or sales this year. There was an increase in the Real Property Gains Tax rates and the minimum purchasing price for foreign buyers in October 2013, which have affected those investing in properties in the region.

Cypress Villa PenangHome prices in Malaysia have been rising faster than incomes. Could a bubble be slowly forming? How will this affect investors? In the past, it may have been easier and cheaper for foreign buyers to purchase a property in Malaysia, but when it comes to rental and future resale possibilities, the prospects may be slightly dimmer now as locals may not be able to afford and there are rules against selling the properties to other foreign buyers. Without a constant rental yield, the property could become an empty shell.

When purchasing overseas properties, selecting a good location may help shield you against some of these risks. And doing as much research as possible, finding a reputable agent, attending investment seminars and talks, will give you the tools to do just that. Home prices in Johor for example, are still on the rise, with a 5.44 per cent growth in Q3 of last year, albeit a drop from 10.93 per cent in Q1. There are still a reasonable pool of middle-income home buyers who are still looking for prime properties in this state, as well as select others such as Kuala Lumpur, Selangor and Penang. Singaporean investors may have the strong Singapore dollar as an advantage but a keen eye for spotting good launches and a sense of the right timing are what makes a worthy investment.

Rental market ended weaker in 2014

Compared to a year ago, the private residential rental market was on a slight downwards slope since last February, with the luxury property market taking the biggest hit with a drop of 1.2 per cent last month.

Parc Rosewood in Woodlands.

Parc Rosewood in Woodlands.

As most expatriates now have a reduced housing budget, properties which are asking for more than $10,000 in monthly rents may struggle to secure tenants quickly. And as the rental prices of properties in the city centre dips and closes in on the rental prices of city fringe homes, the latter may also be facing some fierce competition.

While suburban homes holding up better with their comparatively less expensive rents, the surge of 25,000 new homes entering the market by end 2015 may change the tune of things to come. Private residential condominiums which may be ripe for the rental pickings soon include Parc Rosewood in Woodlands and Eight Courtyards in Yishun.

When many units within the same property enter the market at the same time, property experts are expecting a price war which may benefit the tenants but not necessarily the landlords. As the private property market prepares itself for the upcoming increase in supply, one begins to wonder if the HDB market will benefit from this or will the rental prices there be similarly affected?