Low sales for resale homes in January

With city centre homes leading the way, resale home prices seemed to be walking down the same path as the month before, with a dip of 1.7 per cent. Suburban homes’ decline was slightly less steep at 1.1 per cent and across the board, resale homes saw a 0.2 per cent drop in prices. On the bright side, city fringe properties did fairly well, with a 1.5 per cent gain.

The number of transactions were part of the reason for the drop. In January, only 282 private properties were sold, down from 363 in December last year. Other reasons include the loan restrictions and overall lower buying sentiments. With the festive season coming up in a couple of weeks’ time, the numbers for February may not see a drastic pick-up, but from March onwards, the figures will be telling of the year’s property market prospects.

6DeryshireAs the year goes on, industry experts are expecting buyers to pick up on the softening home prices and keep a quick eye out for serious sellers who may have potentially value-worthy offers. There are sellers out there who are still holding on to their asking prices as they wait out 2015. The year could be a tussle between the these two groups. Any extreme asking prices on both ends will be unlikely to do anyone any favours.

Currently, areas with the highest resale home value (Measured by the amount buyers were overpaying or underpaying) of $60,000 are Watten Estate, Novena and Thomson. In Bukit Panjang and Choa Chu Kang, the prices were a negative $31,000.

A major shift in dynamics this year could be caused by the higher interest rates which are likely to happen this year. Buyers may take that into consideration, together with the tightened loan limits, which does not give them much leeway in negotiations. Sellers who are eager to make a sale will do well to consider these limitations as well and understand that it will not be easy for their buyers to easily fork out additional cash.

Private suburban properties faring better

 

For the resale private property market, condominiums in the suburbs seem to be faring better than those in the city fringe and city centre. While prices of city fringe and city centre apartments fell 1.2 and 1.1 per cent respectively last month, suburban resale properties rose 0.5 per cent. The sales volume also remained the same as November despite the expected lull due to the festive season.
Tre ResidencesBuyers are sharpening their skills at spotting good deals, and are going for units which will benefit them the most in terms of location and future value appreciation. Some buyers have even managed to secure purchases at $10,000 less than the market value of earlier transactions in the same development.

What are buyers looking for now? With the property cooling measures in place, the final selling price tag, including taxes and duties, makes or breaks the deal. Buyers are looking for lower price quantums, good locations and potential for future development in the district. Most HDB upgraders are also most likely to search for these suburban homes to stay close to their previous homes.

As 2015 moves along, and more homes become ready for occupation, will the interest for resale properties in the suburbs continue to burn brightly? Or will the spark wane and the market focus shift to other sectors?

Developers offer more direct discounts

If you’re looking for a good property deal, you could be hitting the market at the right time as developers are now preferring to offer direct discounts instead of indirect ones such as renovation and furniture vouchers and the likes. And the buyers seem to prefer that too.

In a bid to attract buyers back into the property market, developers have realised that with the prevailing property cooling measures, especially the tighter loan limits, it’s the final number that counts. Defraying the total costs through offers of furniture and renovation may no longer seem as attractive to buyers who are now keeping a keen eye on the total quantum prices.

HomeReno1Home buyers are more discerning and aware of how these indirect discounts affect the final sale price and more importantly, the total loan quantum they are able to receive from the banks. Though the rule which states that all discounts, even indirect ones such as renovation discounts and furniture vouchers, have to be declared when applying for a loan were in place since 2002, the banks have only recently been stricter about their checks. What this means for the buyer could be a lesser loan quantum as the amount give in indirect discounts are taken off from the final sale price of the unit, before consideration is given on how much the bank is able to loan.

Now, what developers are doing instead of offering renovation and furniture discounts, are to refurbish unsold units and selling them at a lower price than if the buyer were to purchase the furnishings themselves. Thus, the buyer gets a fully renovated unit at a slightly higher price than an unfurnished one, but at a lower price than if they were to renovate and furnish it themselves. This may be more cost-effective for buyers who are looking to rent out the unit as it saves them money and time.

City fringe homes find their footing

Filling in the gap between luxury and mass-market homes are the city fringe properties. But sitting in this position means being more exposed to market forces such as a lull in the luxury property market, which may be a good thing as buyers may be looking at cheaper options. But a wider and possibly cheaper pool of options pop up in the suburbs in the form of mass-market suburban homes, this might be the first sector to suffer a backlash.

Sky Habitat condominium in Bishan.

Sky Habitat condominium in Bishan.

There has been a recent drop in city fringe home prices as developers are offering discounts to help boost sales. As the supply of these home increase, about 2,411 new units were launched in 2014, so will the urgency to move units. City fringe homes registered a 5.3 per cent price drop, as compared to 4.3 per cent in the luxury homes market and 2.2 per cent in suburban private homes.

Projects where prices were lowered include The Panorama in Ang Mo Kio, Sky Habitat in Bishan and D’Leedon on Farrer road. Though luxury homes hogged the headlines last year with their decline in sales volume, property analysts are confident that the price decline will be minimal as most owners of city-centre homes will have the holding power to hang on to their properties.

2015 – Outlook for Asia’s property market?

2015 is nearly here, and there has been talk that come next year, the property scene in Asia might experience some changes.  Investment interest in Asia property looks to be on the rise as portfolios which have yet to establish a presence in this continent consider it time to do just that.

ScottsSkyParkIt is probable that some governments might ease up on property cooling measures, thus making it easier for foreign investors. China-based investors have already been buying properties within and out of Asia. And as sellers lower their expectations and prices, they look set to continue doing so, if not more voraciously.

In Singapore alone, the outlook for office space looks extremely positive as supply remains low. With many more developmental and redevelopment opportunities arising within the next few years, the demand for office space is likely to rise, thus supporting commercial property prices and rents.

On the residential front, property prices are expected to see a drop of up to 10 per cent as the full impact of the large and fast increase of new properties finally hit the market. However, the luxury home market may see an influx of new investment money, especially properties will good long-term value.

Decline of home prices not reflective of cooling measures’ power

It all boils down to holding power. Of both buyers with their mortgages and home loans; and developers with their unsold units. Despite a year of seemingly repressed property market growth, the actual decline in home prices as a direct effect of the property cooling measures may not be as steep as it feels like. In fact, URA figures show only a 3.9 per cent drop in prices since Oct 1 of 2013 to 30 Sept of this year.

TheVermontCairnhillSince the property boom of 2009, home prices have increased 65 per cent till the end of 2013. Whereas the drop this year is a mere 4 per cent. Which means, property prices are still more than double of what they were before 2009.

Though the average total quantum price of homes may have dropped, the psf prices are maintained at a reasonable level as the main change comes from the diminishing property sizes. Though buyers’ affordability now ranges between $1million to $1.3 million, figures which have held steady for the past 5 years; the median sizes of new homes have fallen from 1, 195 sq ft in 2009 to 753 sq ft in 2014. This is a sure sign that developers are still holding on to their asking prices while giving less in terms of liveable space.

Resale homes are holding up better than new homes however, with a 3 per cent drop as compared to a 6 per cent drop of the latter. This is largely due to developers’ offers of discounts on unsold units. Examples of these can be seen at The Vermont At Cairnhill, and also at Sky Habitat, where more units were moved after a 10 to 15 per cent cut in prices.

Moving into the new year, property analysts are expecting sales volume of next year to be similar to 2014’s, though home prices are unlikely to experience a drastic drop. Rather, a gentle decline into a comfortable equilibrium is what most experts are prone to agree on.

More transparency with Property prices

The Urban Redevelopment Authority (URA) has recently hinted that even clearer property transaction price trends will be provided publicly come 2015. Within the first half of the year, property players, the buying public, and even policymakers will be able to get their hands on prices of individual units in developer-sold properties.
URA 2

Photo credit: Urban Redevelopment Authority (URA).

This may level the playing field as currently, even though median prices of units in each residential project is shown on the URA website, only when units have been purchased, and only those with caveats lodged with the URA will have their prices disclosed.

Part of the reason for the change could be the fact that more developers have been offering discounts and rebates of sorts on new units, ever since the cooling measures kicked in, which meant affordability have decreased and total quantum value has now become the new unit of measurement. As these discounts are often not registered in the caveats, the prices disclosed may not paint the entire picture.
iProperty price transaction page

Source: iProperty.com.sg

Buyers may be able to now better negotiate their deals instead of relying on developers’ statistics. How will this impact the market and while transparency is a mature way of moving forward, will developers be able to withstand the continued price decline? Or perhaps the question would be, how long more before prices hit the bottom of the curve and begin its upward climb?

Some luxury homes still making tidy profit

A few months back, luxury, high-end properties were finding it hard to lock down an audience. But apparently even though the number of takers were low, those who did shake on a deal were making a tidy sum.

Ardmore ParkLuxury homes in the Orchard area have been changing hands at high prices. This is particularly evident in the Ardmore Park apartments which brought a profit of $2 million each for the owners of 2 units in this high-end residential development by Wheelock Properties.

Property analysts however, are considering the spike to largely be condominium-specific as homes in the Nassim area did not seem to fare as well. Besides location, the unit-sizes are also indicative of the possible investor profile. Most of the homes at Ardmore Park were similar in size, each measuring approximately 2, 885 sq ft, which meant that buyers of these properties are more likely to me wealthier, with deeper pockets and different investment agendas. A1,335 sq ft unit in Tanglin Park condominium in Ridley park, though considerably smaller in size,  sold for a tidy $1.07 million profit as well.

Grange ResidencesDespite being in the same vicinity, a couple of Grange Residences and Nassim Park Residences units sold at a loss. It could be anyone’s game at the moment, but it seems buyers are becoming highly specific about the development they hope to buy into and competition between projects in the same district could be facing even fiercer competition for the same wallets come 2015.