Singapore home prices down last quarter

Across the board, property prices have dipped again last quarter, but resale HDB flat prices may be stabilising. Following the first quarter decline of 1 per cent, resale HDB flat prices dipped only 0.4 per cent last quarter, possibly signifying a bottoming out of this market.

Optima condominium at Tanah Merah.

Optima condominium at Tanah Merah.

Nudged by the lowered mortgage servicing ratio cap from 35 to 30 per cent and reduction in the number of new BTO (build-to-order) and SBF (sale of balance flats) units, HDB resale flat prices have fallen for a few quarters now. Property analysts are expecting a stabilising of the market, or at least a rise in demand for resale units as HDB plans to increase the income ceiling for BTO flats, which may replenish the pool of potential resale HDB flat buyers.

Private home prices are however expected to fall further this year, especially as resale HDB flat prices have fallen so quickly the gap between private suburban homes and the former have widened. Some HDB upgraders may think twice about selling their HDB flat to purchase a private condominium unit and others may turn to resale flats instead of private homes. The expectation of a rush of new private apartment units to hit the market in the later half of this year may have also put a damper on market prices.

In the first quarter, private home prices fell 1 per cent, and the fall remained steady in the second quarter at 0.9 per cent. Moving ahead, prices of private non-landed homes are expected to fall 4 to 6 per cent by the end of the year.

 

Sentosa Cove units fetch high prices once more

There was a time when luxury properties on Sentosa fetched luxurious prices. That time was more than 2 years ago. The property cooling measures have hit home since their implementation over the past couple of years however, and sales number sand prices have dropped with the imposed additional stamp duties and loan restrictions.

TheOceanfrontBut there may be light yet in the horizon. Recent sales of 2 units at The Oceanfront condominium apartments in Sentosa Cove luxury enclave have soared above the $2, 000 psf range despite their lack of a waterfront view and their low-floor  Previous sales, which were few and far in between, have gone as low as $1, 190 psf. That was a $463 psf loss on a $1, 653 psf second-storey apartment at The Coast. Considering the fact that most mass-market homes on the mainland are already going at the $1,000 psf range, prices have declined substantially since its peak in 2008.

Will investors with deep pockets continue to pick up deals on the island, especially as prices dip? And will those who have already purchase units on this exclusive waterfront-living enclave continue to hold off on selling in wait of prices rising in the future? How much more will prices be able to rise and will the competition with units on the mainland only become fiercer?

Private property prospects for the next 2 years?

The Singapore General Election may be coming up in the next year and a half, and that leaves most wondering about possible policy shifts and how that would affect the country’s economy. Since the last election, immigration and loan policies have changed rather substantially, both of which have impacted the property industry in a number of ways.

Melrose VilleOn the financial front, the TDSR (total debt servicing ratio) framework has been effective in slowing down property demand. With the likelihood of interest rates here rising in tandem with US rates, it seems unlikely that this policy will be removed or relaxed anytime soon as it aims to help households and borrowers build a clearer structure around their long-term financial stability.

A decrease in immigration numbers have also affected the property rental industry, with vacancy rates possibly hitting 10 per cent at the end of 2015. Coupled with a growing number of completed new units made available within these 2 years, the supply could majorly outweigh the demand. Property experts suggest that the only way to slow down the property prices and demand decline is to reduce the speed and quantity of new properties, and an adjustment of the TDSR. There is no sign of change for the moment, but would next year bring about a fresh wave of changes?

Future new private homes in 2 estates

Toa Payoh is well known for its attractiveness as a mature HDB estate, well chocked with amenities and commanding considerable prices for the resale HDB flats. However, the private condominiums in its midst are far and few in between

TreVistaTreVistaBut that might soon change as a private residential site near Braddell MRT station has been put on sale which might yield new 99-year leasehold properties in the future. Since the Government Land Sales Programmes (GLS) is planning to reduce the number of plots going up for sale, bidding for this prime site was keen, with 14 bidders going in with the highest coming from Evia Real Estate and their partners, Maxdin and Gamuda at $345.86 million. Selling prices of the new property is expected to range between $1,450 psf and $1,550 psf.

Just like Jurong and Lakeside, developers are expecting pent-up demand for private condominium apartments in Toa Payoh to work in their favour. The newest launch here, which has been for sometime now, is Trevista.

Hundred Trees on West Coast Drive.

Hundred Trees on West Coast Drive.

Another popular site which went up for sale under the GLS programme is one at at the Sungei Pandan waterfront at West Coast. With the possibility of yielding up to 600 homes in an area near the Westgate and Jem shopping malls, the Science centre and the future high-speed rail terminal in Jurong East, this 99-year lease term site is expected to fetch $370 million at auction. Nearby properties such as Waterfront @ Faber, Infiniti and Hundred Trees, have all fared well with some having sold out.

 

 

 

More landed homes sold

Those living in landed housing estates may recently have found a shift in neighbour dynamics as more homes changed hands in the past 2 quarters.

Since beginning of the year to the mid of the second quarter, there has been a 15.3 per cent rise in the number of landed property sales, 316 sales transactions with caveats lodged to be exact. Since the price peak in 2013, prices have come down and may have become more palatable to the buying public. For those hoping to snag a private landed home, now could be the time as prices are unlikely to drop even further.

BishopsgateBungalowLanded home prices have since dropped 7.2 per cent and as the Additional Buyers’ Stamp Duty (ABSD) for second-time buyers will be revised by the end of this year, there is only a 6-month window to avoid paying more in duties. It’s not only home owners and individual investors who are purchasing these landed properties, but also developers who are hoping to turn a single plot of land into a potential cash cow. Older bungalows with their extensive land area are of particular interest to developers hoping to rebuild them into viable modern options. Some of the other buyers include new citizens.  A recent $33 million bungalow sale to a China-born Singaporean was recorded at Bishopsgate.

Other areas with increasing landed property sales include Robin Road, Hillcrest Road and Oriole Crescent.

 

Cluster landed homes – The next goldmine?

Landed homes have always been known to be one of the most expensive properties in land-scarce Singapore and understandably so. And most would think that properties with individual land titles will always be a step ahead of leasehold properties. But apparently strata landed properties, or more commonly known as cluster landed homes, have seen the fastest price rise over recent years.

The four types of landed properties in Singapore are:

  • Leasehold non-strata landed homes
  • Freehold non-strata landed homes
  • Leasehold strata landed homes
  • Freehold strata landed homes

Casa FidelioAnd the last one on the list above have seen speedy rise in value of 77.3 per cent from 2004 to 2008. And the third on the list have been even more popular since 2009, with the fastest rise in capital value of 20.1 per cent a year. This could be due to the fact that most of these cluster homes have been built in the last decade or so, and have better floor planning and a larger floor area due to the fact that they are often built up to at least two storeys. Some older freehold landed properties may come with a land deed, but often extensive renovation have to be done, which raises the cost for the buyer.

Hillcrest-VillaPhoto credit: MCL Land

Examples of the price rise in freehold cluster housing properties can be seen at the Casa Fidelio in Siglap. In 2004, a terraced house cost only $760,000 and by 2008, it was sold for $1.18 million. In 2007, the launch of the Hillcrest Villa in Bukit Timah also pushed prices of cluster landed homes up by almost $1.5 million. Though landed properties are one of the highest profit-earning tickets out there, the cost of such properties in today’s market will require a healthy bank balance and deep pockets. What options are there out there for buyers who wish to invest in such properties? 

 

The private home gentle wave

It’s an up and down ride for the private non-landed property market for more than a year now. Across the board, non-landed resale home prices dropped 6.2 per cent last year. Prices of homes in the central districts dipped an average of 7 per cent last year, though there were good months when some segments managed to bounce back slightly before falling again. That could mean that things were mainly level though there are outliers.

Duchess ResidencesResale private apartment prices fell 0.2 per cent last month, with a 3.9 per cent fall compared to the same month last year. But some city fringe properties bounced back with an average price rise of 0.4 per cent. Part of the yoyo-ing in prices could be due to the Chinese New Year period in February and buyers were just coming back into the fray in March.

The second quarter of this year would be a crucial point in almost determining how the rest of the year will flow, at least up to just before the Hungry Ghost month. Though the ride has been more a gentle wave of price fluctuations rather than a roller coaster ride, property experts are however not expecting a drastic change in prices unless there are major policy changes or a major interest rates hike.

The year could be a relatively quiet one with bright sparks and dull moments along the way, but the basics of good location and lowered total quantum prices will still move units.

Private properties – Not all in the slumps

Recent figures showed that the property cooling measures have only really affected the luxury market, which has slipped into the red.

Even then, there are properties within the private property market which have not been as drastically affected by the measures and market slump. At Cote d’Azur in Marine Parade for example, prices rose by 4.3 per cent. Prices of resale units at Costal del Sol also rose 4.5 per cent. And for the new property market, in Chestnut Avenue, selling prices of units at Eco Sanctuary showed a promising increase of 4.1 per cent.

Eco SanctuaryAlthough this could be caused by developers choosing to release juicier units later in their launch schedule, enticing buyers to purchase at their latest launches, this nevertheless gives hope to the market. Buyers are still wiling to fork out the cash to get the units they want. And there is no lack of these savvy folks.

Naturally as with all market movements, effects are never seldom felt the same way across the board, there will be units with more potential than others. It takes a keen eye and a close followup of market trends to make a killing at the right time.

While this is good news for property developers and sellers, it raises the question of whether the property cooling measures have really been effective in making property purchasing affordable for the majority, or only instead stymied the inflow of foreign cash earnings in the high-end property market?