Buyers think property market cool-down is here to stay

Private property prices and sales have been cooling for the past few months, and the market sentiments are that the cool-down will continue into the next year. Almost 4 in 10 people think that property prices will continue to decline over the next 6 months, though young couples who are at the verge of moving into the private property market think that a rise in housing prices may still be possible.

SantoriniInstead of a drastic fall in property prices, what 2014 has seen is a stabilisation of prices. HDB flat prices started off the price-drop which began in the second half of 2013. The private property sector followed suit in the beginning of this year. The most hard-hitting cooling measure was the restrictive loan limit which meant it became harder to borrow money to purchase a property. Although this may have made private property prices fall slightly, prices of HDB flats have not fallen significantly enough and with it becoming harder to get a HDB or bank loan, buyers of resale flats may be priced out of the market.

Thus a valid question may be, is the price decline sufficient? Is the decline sector- specific and is owning a property in Singapore a feasible goal for most citizens? What else can the authorities do to ensure equal opportunities for all. As the country prepares itself for the next General Election, answers may come soon.

The future of Singapore’s property market – Looking outwards or inwards?

The property industry experts are hoping that the Government will take crucial and timely steps to aid the country’s property and construction sector should trouble loom.

8scape Malaysia property

Photo: 8scape Residences in Malaysia.

Redas (Real Estate Developers’ Association of Singapore) president, Mr Chia Boon Kuah recently mentioned that the impact on the property sector could similarly transfer to an impact on the country’s overall economy. The vacancy moving forward is expected to hit 10 per cent as the number of new properties reach 68,000 in the next few years. Transaction volume has declined by half of last year from 18,000 to 9,000.

There were also talks about the languishing luxury property market here. The stricter measures and higher taxes may be reasons for wealthy investors looking elsewhere in the region for property investment opportunities and even draw Singaporeans away from investing within their own country.

However, with possible interest rates hikes and stimulus slowdown in the United States, interest in overseas property investment may be waning. As the local property market cools, and prices start coming down, some may also choose to take the wait-and-see stance, possibly holding their horses for a good future run in the local markets. How will the market fare in 2015 and will buyers be drawn to local or foreign properties?

Price reduction at the Lake Life

Just launched not long ago, the latest kid on the block – Lake Life EC in the Jurong Lake district is already offering units at prices lower than its initial estimation. Prior to its launch, the price tag was expected to hover between $880 to $890 psf. But it seems the average is now around $857psf.
lakelife ECThis could be due largely to the loan limits and subsidy caps for executive condominium buyers. Before the cooling measures went into full force last year, prices were much higher as buyers could apply for larger loan amounts. In comparison to its neighbouring private condominium, Lakeville, prices at the EC are much lower. Lakeville units are selling at the medina of $1, 328 psf. Considering the fact that ECs will eventually become private condominiums, which may mean a wider profit margin in the long run. Executive condominiums (ECs) are a hybrid between public and private housing, and buyers can sell them in the market after 5 years, and after 10 years, the development will become a private residential property.

Reacting to the smaller loans which buyers can now receive, developers are adjusting their strategies to offer units prices at a lower quantum prices as compared to lower psf prices. At the Lake Life, 84 per cent of the units have been priced below $1.1 million. A few townships away in Woodlands, and over in the north of the island, the launch of Bellewoods and Bellewaters executive condominiums this weekend may fan the EC fire and buyers will have more fodder for comparison. Prices, expected to be set between $750 to $820 psf, will be competitive. What will buyers be looking out for?

Private resale homes – Dip in sales volume and prices continue

The number of resale transactions of private properties have dipped across the board and that in turn has affected the pricing index reflected by the SRPI (Singapore Residential Property Index). SRPI figures showed a 0.7 per cent drop in September, despite hopes that the market will rebound after the Hungry Ghost Festival.

STeven SuitesProperty analysts are reporting an imbalance in the expectations of home sellers and buyers. Stronger holding power of home sellers have meant that fewer properties were exchanging hands and they have instead opted to hold on to their properties till the market turns around. With the exception of shoebox apartments it seems. There was a price gain there of 0.4 per cent. This could be a clear indication of the preferences of buyers in the current market situation and perhaps provides an inkling of the months ahead.

One of the most affected property sectors are the luxury homes. Although buyers and investors of these high-end properties may not be detoured by the additional levies and loan limits, they may be deterred by the buying restrictions. And as the number of unsold luxury properties increases, developers are now offering discounts to entice them back into the fold.

As 2014 draws to an end, many may be wondering how the property market will fare in 2015. As the government has recently announced that the property cooling measures are not likely to ease in the near future, property analysts are expecting a 8 to 10 per cent decline. What will that mean for the overall market and will any particular property type stand out? Will the drop in private home prices mean a similar drop in HDB resale flat prices or will the demand for resale flats rise as more turn towards this less expensive option?

Private home sales down in Q3

Despite recent new launches, private home sales remained lacklustre as the third quarter registered  lowest sales figures since 2008. Only 1,596 new homes were sold in the last 3 months, though 648 units were sold in August alone, signifying a plausible comeback.
 Tre ResidencesSome of the more popular residential properties were the newer ones such as Highline Residences, Seventy St Patrick’s, Lakeville, Eight Riversuites, and some new launches from projects such as The Panorama. As per previous years, post Hungry Ghost Festival meant home buyers were once again eager for new deals and were actively seeking property purchase opportunities.

Across the board, 6,030 private properties were sold in the first 3 quarters of the year, almost half that of the same period last year. Much of the decline was due to weakening demand in the primary market, which could be a result of the tightening home loan limits implemented in June 2013.

Upcoming launches of Sophia Hills, Tre Residences and Symphony Suites might bring renewed activity into the market and possibly close the year on a high. But most of the attention will be in the executive condominium (EC) market as the drought of new launches in this sector welcome new launches of Lake Life, Bellewoods and Bellewaters.

Rise in HDB Resale flat sales

As HDB resale flat prices continue to decline for the eighth month in September, buyers are taking the opportunity to suss out the best deals. The number of sales transactions for HDB resale flats rose to the highest since April this year. A total of 1, 469 flats were sold in September, up 10.7 per cent from August and almost 20 per cent from the same month last year.

St George Towers

Photo credit: HDB

It comes as no surprise that the larger flats saw the largest fall in prices. Five-room HDB flat prices fell 1.6 per cent, followed by three- and four-room flats dipping 0.2 per cent and ECs (executive condominiums) 0.1 per cent. The recent numbers also revealed the fact that buyers are willing to accept a smaller price difference between the selling price and the average market value when previously, they had expected larger margins before committing to a deal.

Some of the factors contributing to the drop in HDB flat prices could be:

The first and last two factors in the list may have more lasting effects that expected. And it may change the value and purpose of HDB flats. But would the change be all that bad? Or will it help refocus investments into the private property market?

Downturn for Downtown homes

The luxury property market has taken a downturn as homes in the downtown areas take a hit. Transactions were still taking place, and there were homes being resold, but an increasingly number of them at a loss. Recent transactions show a $60,000 loss in the resale of a Marina Bay Residences unit just last month. One of the largest differences came from a $342,000 loss from a subsale of a Robinson Suites unit.

eMuch of the competition comes from unsold stock from developers, a dipping rental market and a diminishing expatriate population. The first factor could be the most hurtful to investors as some developers have begun adjusting prices downwards, and even renting out unsold units instead of selling them. This puts up fierce competition for buyers who have originally planned for their properties to earn them the monthly sustenance through rental. Even small apartments and and one-bedders are meeting similar fate.

Downtown home prices have fallen 8 per cent, and properties in the prime districts 9 and 11 have fallen 5 per cent. Ultimately, it may come down to holding power. And learning some tricks of the trade through property seminars and talks could be the best way to safeguard yourself from bad investments.

Private property out of reach for HDB Upgraders?

If home prices are falling, most would think that the upgrade from public housing or HDB flats to the private home market should be getting easier. But it seems the opposite is true.

Prices of HDB flats and a private condominium apartment are perhaps softening at around the same rate, or that of HDB flats possibly even quicker. This creates a widening price gap between resale HDB flats and private condominiums, and HDB sellers can no longer depend on the sales proceeds of their HDB flats to balance out the price of their new private condominium.

BellewoodsECPhoto Credit: Bellewoodsec.com

Does this also mean that more HDB flat owners will now be forced to stay put and thus decrease the number of HDB flats available in the resale market? What about those who may have already purchase a private property and have a limited time period within which to sell their HDB flats? WIll they be pushed to sell at lower prices hence suffering the growing amount they need to top up?

Property experts are expecting ECs or executive condominiums to be the bridging properties between these two markets. As a hybrid between public and private housing, buyers qualify for public housing subsidies but after a 10-year period, can sell their units as private properties.  There is also the question of home sizes, will HDB upgraders be willing to settle for lesser space and a higher psf price to make the leap from HDB to private home?