Limits placed on tenancy of private homes

From today on, private homes can no longer be tenanted by more than 6 unrelated persons. This is 2 lesser than previous cap of 8 persons.

Enforced by the Urban Redevelopment Authority (URA), the new ruling kicks in today but existing tenancy agreements of 7 or 8 persons will be allowed to carry on until May 15, 2019 regardless of the tenancy contract’s expiration date.

TownervilleThis change was made to keep the integrity and character of the local community and to ensure that residential premises integrate with the neighbourhood. The move will also better engage the services of student hostels and company dormitories. There are differing views to this change. Property agents, some landlords and even tenants may welcome this shift towards quieter and less disruptive living environments. Others who are relying on rental income to prop up their finances may have opposing views. The loss of 2 tenants could very well surmount to $1800 to $2600 in potential monthly rents.

This shift to tenancy regulations will also affect home-sharing market such as Airbnb. The URA has been considering the creation of new leasing category for short-term rentals such as those publicised on home-sharing sites. And for those wondering if a huge bungalow and a small private studio may have different restrictions? The answer is no. URA has stated that there is no “stratified occupancy cap control based on unit sizes”.

Aura83For HDB flats which are sublet, the number of sub-tenants allowed remain unchanged at 6 and 9 for 3-room and 4-room or bigger units respectively. Property analysts are however expecting this new tenancy rules to soon apply for the HDB market.

 

Condominium rents up, HDB rents down

A brieft respite in the rental market presented itself in January and February as increases in condominium rental rates were recorded for 2 consecutive months. HDB rents however slipped slightly.

Draycott8Condominium rents rose 1.1 per cent in February as demand from expatriates is usually high in the first few months of the year. Private residential properties in the prime districts were particularly in demand with a rise of 1.2 per cent in rental rates, while the city fringe and suburban sectors saw a 0.8 and 1.2 per cent rise respectively.

Property analysts are seeing an increase in leasing demand not only due to the influx of a foreign workforce in the beginning of the year, but also because rents are now at a affordable levels and more tenants may be willing to take on larger properties or properties in a more expensive location. Though rents are still 18.1 per cent lower than the peak in 2013, sales volume has increase by 12.6 per cent in comparison to the same period last year.

JurongWestCentralHDBFLatThe number of HDB flats being leased has also increased by 1.2 per cent with 1,477 units rented in February. HDB flat rents have however slipped by 0.8 per cent overall, falling 1.3 per cent in mature estates and 0.3 per cent in non-mature estates. Industry experts are expecting further decline in rents this year, while harbouring hope that 2017 will stabilise the market and bring about a recovery early next year.

Weak rental market not an obstacle for investors

While the weakening rental market may have been putting pressure on investors, the concurrent weakening private property prices are opportunities to some. While the leasing market has slowed down considerably, the property-purchasing market has been gaining speed, especially in the last quarter or so.

TRE ResidencesThe overall genial atmosphere in the private residential property market over the past few months have brought property investors back into the heat of things. As more newly completed properties enter the market and new projects such as The Clement Canopy and Grandeur Park Residences were launched to affirmative responses early in the year. Overall private home prices fell at the slowest rate in 3 years, which could point to an increasingly stabilising market.

It would be prudent however for investors to take into consideration that the property cooling measures have not yet been lifted, though some signs of relief have been provided earlier this month. In the past, profits of up to 60 per cent could be reaped in the short-term, but the long-term potential of a property, rather than quick turnarounds or a dependency on rental profits, will be at the heart of a good investment henceforth. Property analysts advise investors to consider cash-flow, calculate mortgage and maintenance costs carefully while keeping a portion aside for periods of negative cash flow when  the property is unable to be tenanted.

New Tanah Merah condominium show flat draws thousands

Grandeur Park Residences premiered its show flat to a grand crowd last weekend as they thronged the Tanah Merah site in all eagerness. It will officially open for purchase on March 4.

GrandeurParkResidencesMost of the potential buyers were there to suss out the new 720-unit residential project situated near the Tanah Merah MRT station. Its proximity to the MRT station and location has no doubt attracted keen eyes. Most have spotted this new project for its rental and investment potential.

As more than half of the units in Grandeur Park Residences are one- and two-bedders, the more palatable quantum prices is a big draw for investors. Prices of the 2-bedroom apartments start from $700,000. Though the developers expected a big crowd at the launch of the show flat, the response has been overwhelming and is indeed a positive sign.

ParkPlaceResidencesThere has been glimmers of hope in the resale flat and rental markets just within the first month of 2017. The new condominium market has also been faring well even before the start of the year. And there will be at least 2 other major launches coming up in the months ahead, such as Seaside Residences in Siglap and Park Place Residences in Paya Lebar. Thus even though analysts are hesitant about calling it a good year for the market, consumer confidence is once again building up.

Fall of private home rents put dampener on market

Hana CondoFor the 6th month in a row, private home rental rates have fallen with an even sharper 1.3 per cent drop last month. In the HDB market, rental prices have however edged up by 0.2 per cent. The overall decline in rents is smaller in this market, at 3.7 per cent for the entire year of 2016. In the private property market however, for the whole of last year, rents have fallen 6.2 per cent and in a year-on-year comparison with January 2013, almost 20 per cent.

Not in particular good news for those who have been counting on rental yields to help with their multiple property mortgages. Plus a probable interest rates hike this year, the market could be looking at more sellers putting their property in auction sales or banks being more active in their mortgage auction sales. This could however work in the favour of buyers who have been looking for a home to live in. The closing price gap between private housing and higher-end resale public housing may also cause some contention and competition, with location and floor area possibly being the deciding factor for many.

KatongRegencyNot only has rental rates fallen, so has leasing volume. The number of condominium apartment leases fell to 3,691 last month, down 2.2 per cent from November’s 3,775 units. Last December’s leasing volume however is 17.1 per cent higher than in the same period in 2015. Overall, the rental market is weakening and investors can no only rely on rental yields to help tide them over.

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.

Sparks of hope in property market

Despite the prolonged property lull, analysts are hopeful that a few sparks of recovery will begin to rejuvenate the market this year. The office sector may boost the commercial market while high-end luxury homes will hold up the residential property segment.

dleedonAs far as regions go, the core central region is heating up in terms of foreign interest in both residential and commercial properties. The sliding private home prices, by 11 per cent since 2013, have brought investors back into the luxury homes market. Currency valuation will however continue to play a part in the movement of investment money, and Singapore will still have to compete with other cities such as Melbourne, Sydney and Shanghai for investors’ attention.

Compared to other major cities such as Hong Kong, New York and London however, apartment prices here have fallen and will become more appealing to foreign buyers as the potential for yields in the medium term is considerable, especially as these specific market segment is expected to perform well this year.

skylineorchardboulevardThe collective sales market is another to watch in 2017, as developers are expected to collaborate to build up their store of land sites for long term yields. There might also be acquisitions of smaller developers by larger ones in order to participate in the government land sales programme. Property prices are expected to remain stable but depending on a property’s rental yields as a means of investment or profit could become less attractive as investors find it more difficult to find tenants in an increasingly competitive market.

How to make your rental unit shine

Though the Monetary Authority of Singapore (MAS) has reminded property investors in their Financial Stability Review released late last year of the increase in vacancy rates and declining rental market, there are still ways to ensure the best yields from the properties you have invested in.

lagunagreenFinding yourself a reliant property agent is of course the first step, and experienced agents can often advise you on how to make your property more appealing to tenants, what to look out for when selecting a suitable tenant and what the current market sentiments or pricings are like. But putting in the behind-the-scenes work will also get you the results and the little things do make a difference.

As more tenants are taking their search online, making an online presence, and a good one, will at least help to bring in the views. The reach of social media and online platforms where expatriates often visit could be extensive. On occasions, you may even consider online advertising. And providing a 360-view of your unit will also provide tenants who search online with a more comprehensive idea of what you are offering. This helps save time for both landlords and tenants.

loyanggardensBefore taking any photographs, some home-staging will go a long way. The rise of Airbnb (though not yet legalised in Singapore) means tenants now have more options or are used to more elaborate visuals of the units they potentially select. Taking care of tiny details such as cleanliness, lighting, placement of plants or quality of furniture and utensils all play a part in making the tenant feel comfortable and could be just what gives them the final push to sign on the dotted line.