Home prices surge in Australia and New Zealand

There has been a recent surge in property prices in Australia and New Zealand, in particular Sydney and Auckland. Not surprising that these are higher-density cities with housing shortage and high immigration rates.

In Sydney, high-rise living is beginning to take off with developers looking for land to build upwards. Multi-unit properties have multiplied over the past year, with approvals for high-rise residential developments rising by 28 per cent. The increased supply of homes these properties will eventually provide may bring home prices down slightly but for now, they are sky high.

main-2Some home owners whose combined land area come up to at least 4,000 sqm, have even banded together to sell their homes collectively to developers at premium prices. For example, a single standalone brick house could fetch around $1million in the suburbs, but when sold collectively with 3 to 4 other homes, they could command $21 million which means at least $4 million per house. There are fears however that the country could be entering a property market bubble, which could prove dangerous for their banking system.

Over in New Zealand, lowered interest rates and official cash rates set by the Reserve Bank of New Zealand (RBNZ) has fuelled housing demand and more buyers are now investors, making up 41 per cent of all housing purchases. The New Zealand government is looking at ramping up housing supply to help relieve some of the pressure on the housing market.

Raised Income ceilings for HDB and EC flats

In the months ahead, the HDB market may see some significant changes.

In his National Day Rally speech on Sunday, Prime Minister Lee Hsien Loong announced a raise in income ceilings for new HDB flats as well as ECs (executive condominiums). The income ceiling for HDB flats could be raised from $10,000 to $12,000 and for executive condominiums, from $12,000 to $14,000. Just four years a, the income ceiling for ECs was raised to $12,000 but apparently income levels have risen since then. The government are also making it easier for lower-income households to purchase 2-room flats. The Special Housing Grant (SHG) will be raised from $20,000 to $40,000, giving them the financial support they truly need.

Forestville Executive Condominium.

Forestville Executive Condominium.

And to promote stronger familial ties plus cater to the growing group of young families who prefer to live near their parents, a new Proximity Housing Grant will help buyers who wish to live near their parents or married children secure their new flat.

This could be good news for buyers and home-seekers, as more applicants may then find themselves eligible for a new BTO flat or EC. But will there be more applicants now vying for available units. And how will this move  possibly affect the resale HDB flat market?

 

Property Auctions – Going, going, gone

With interest rates growing and demand on the decline, some home owners may be forced to allow their property to go to auction.

Mortgage auctions have been on the rise with a total of 99 homes put up for auction in the January to July period of this year alone. Property analysts are expecting an increase even as interest rates rise, with numbers hitting closer to 200 by the end of 2015.

GCB Leedon RoadRecently, landed homes, in particular larger ones such as corner terraces, semi-detached or detached houses, were the more frequent subjects of property auctions. Buyers may have been attracted to the higher profit margin of these properties, but failed to gauge their holding power. Finding buyers for these big ticket items is more difficult as they often come with a very much higher total quantum price and the pool of buyers is restricted to Singaporeans and Singaporean Permanent Residents (PRs).

Some of the properties which have sold at recent auctions include a Good Class Bungalow (GCB) at Binjai Rise, a detached house in One Tree Hill and some larger apartments in Seascape @ Sentosa Cove and Orchard Scotts.

Investors seem to favour smaller apartment units at property auctions as falling rental yields all around have made them more wary. Although not as dire as the 2008 Lehman Brothers and 1998 Asian financial crisis, investors and government authorities are keeping a close eye on the market direction. Property cooling measures have seemingly curbed rampant property flipping, but could there be more room for swifter, sharper manoeuvres? How much wriggle room should you leave yourself if you’re hoping to score a good deal at the auctions?

 

Suburban London districts growing – Silvertown

Mixed-use properties once again capture buyers’ hearts, now in the Royal Docks suburbs in East London. A new mixed-use development led by the partnership between Chelsfield Properties, First Base and Macquarie Capital will house 3,000 residential units, amidst offices, recreational and commercial spaces all housed within a 25 ha site.

Silvertown2Silvertown2

Photo Credit: Silvertownlondon.com

Named Silvertown, it is situated in the fringe of the city, where new properties are sprouting aside from the usual real estate hotspots such as Canary Wharf, City of London and the West End. As property prices climb in London, a home  in the City of London could come up to £1,500 psf. in the West End double that at £3,000 psf. In comparison, city fringe properties are structured to be more affordable for local as well as foreign buyers. Developers are hoping to target Asian investors in particular as they are a growing group of overseas investors in the UK, spending up to£5.98 billion over the last year and a half.

The clarity of property rules and the relative ease of property buy-and-sell for foreign buyers have built the confidence of overseas buyers in respect to properties in London, as compared to other cities in the Euro Zone.

Silvertown1

Photo Credit: Silvertownlondon.com

The Silvertown development will be will linked to other areas in terms of transportation options. The much-waited London Crossrail rapid train project will be connected to it, and it is also pegged to the Royal Docks’ plans for refurbishment of the historic Millennium Mills, an old mill building which will be transformed into office spaces.

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.