Sellers’ Stamp Duty rates tweaked

From March 11, the staggered rates which sellers have to pay should they resell their properties within stipulated time periods will be reduced. Previously, properties sold within a year of purchase were subjected to a 16 per cent seller’s stamp duty (SSD), the rates are at a staggered 12 per cent for properties sold within 2 years, and at 8 per cent and 4 per cent for those sold within 3 and 4 years respectively.

SingaporeskylineThe new tweaks to the regulation means that sellers now only have to pay 12 per cent stamp duty for properties sold within a year, and then at the staggered rates of 8 and 4 per cent for those sold within 3 and 4 years respectively. Whiles some buyers might have missed out on this new ruling by a day, the effect of the change on buyers who have purchased for the long-term will be minimal. This slight change in the property cooling curbs may provide a more fertile environment for property investment and some buyers may be interested in making headway with a second or subsequent property.

Whether this will boost home sales this year remains to be seen, but property analysts are expecting a slow and muted effect on the market. While the change may not translate to actual figures, with property analysts expecting only a 3 per cent increase on the previously projected 8,000 property transactions for 2017, what it does create is an atmosphere of positivity and a sense of hope. Any tweak by the government, however slight, could be seen as an indication of the market bottoming out, and following a period of market stabilisation, investors are hopeful that the market will eventually recover.

Luxury market makes for a suitable investment playground

Recent news of veteran banker and one of Singapore’s richest men, Wee Cho Yaw’s latest property purchase of 45-units at the luxury property, The Nassim for $411.6 million, may have reignited interest from potential buyers of high-end luxury apartment units.

Seascape at Sentosa Cove.

Seascape at Sentosa Cove.

Although property prices have fallen last year, the rate of decline has slowed and the luxury market has fared considerably better than the other property segment. Prices of high-end properties in prime districts, particularly in the Central Business District, Orchard road and Tanglin areas, have fallen 1.2 per cent last year. But the fall is still lesser than the 2.8 and 3.4 per cent in the city fringe and suburbs respectively. This segment also clocked more transactions last year, an increase of 48.7 per cent from 2015. Home sales in the city fringe and suburbs rose by 27.2 and 3.7 per cent.

Meyer Road Bunaglow2Property analysts are confident that the luxury market will find its footing more firmly this year as the supply of high-end properties will increase in the next few years. Though rents have fallen, those who have the holding power will come out tops in the long run, when the property cooling measures are relaxed. Most sellers put a 15 to 20 per cent premium on the value of freehold properties. Property auctions and en bloc sales could be activities to watch this year, especially for those with cash to spare and the financial endurance to last through at least the next few years.

 

Freehold site to yield potential landed homes in Orchard road

The Orchard road belt has not seen landed homes in its midst, or at least new ones, for quite sometime now. They are few and far in between and usually cost more than an arm and a leg. But a freehold residential site near Orchard road worth $72.8 million might potentially yield landed homes.

OneTreeHillGardensThe One Tree Hill Gardens site measures at 39,063 sq ft and currently consist of 6 maisonettes and 7 apartment blocks or $1, 864 psf in asking price. The units here are of considerable sizes, ranging from 1,916 to 4,682 sq ft. Should the development succeed at a collective sale, each home owner could receive anything between $4 to $11 million. What the site could potentially yield are 13 detached and semi-detached houses. Considering the prime district, the rarity of landed homes across the board and more so in the centre of town, and the lack of sizeable residential sites readily available for redevelopment, marketing agent Knight Frank is confident of the interest the site will garner. Recent sales of sites in Grange Road, Cuscaden Walk and Hullet Road have all drew considerable bids of $190.5 million in total.

The area surrounding the One Tree Hill Gardens site is in itself an exclusive enclave of high-end apartments and some landed homes. Add on its future proximity to the upcoming Orchard Boulevard MRT station along the Thomson-East Coast Line and up goes its value.

Will property market bottom out soon?

Hopes of a market rebound may be reignited as the bottom of the cycle seems to be in close reach. While private home prices have fallen by 0.4% for the 13th consecutive quarter, the rate of decline of private home prices have been reduced from the 1.5% in 2016’s Q3.

cairnhillresidencesIn 2016, private home prices fell only 3%, the slowest since 2013. Since the third quarter of 2013, home prices have fallen 11.2%, with a 4% fall in 2014 followed by a 3.75% fall in 2013. The projected fall in home value this year is 2% to 3%. While home seekers and investors may be drawn back into the market with the lowered property prices, analysts are not expecting them to splurge.

highlandresidencesIn Q4 of 2016, non-landed private home prices fell 0.7 per cent, led by city fringe properties with a 2 per cent drop. Prices of units in the core central region remained unchanged while suburban home prices fell 0.3 per cent. Units in the core central region have suffered a 1.9 per cent fall in Q3, thus the fact that sales volume have increased while prices remained unchanged could be a good sign for the year ahead.

Landed property prices posted a surprising rise of 0.9 per cent after a 2.7 per cent fall in Q3 while in the resale HDB flat market, prices fell 0.1 per cent.

More deals in Q4 sealed in auction property segment

Sales of auctioned properties in the 4th quarter alone have accounted for more than half of the total sales for 2016, that is almost 5 times more than the $10.3 million in the same quarter in 2015. At $47.2 million, and possibly more when the numbers are tallied come end December, this sales figure already stands at 51 per cent of the entire year’s property auction segment sales.

Seascape at Sentosa Cove.

Seascape at Sentosa Cove.

Property analysts report that this is unusual for the year-end period which is usually a slower time for the property sector due to the festive season and school holidays. Most of the transactions hailed from big-ticket prime land plots as well as larger, highly-priced residential properties. 3 vacant land plots within the Swiss Club estate in Bukit Tinggi, Jalan Kampong and Kampong Chantek and another at Jalan Bahasa boosted sales in a big way. Developers have increasingly been on the lookout for land plots to replenish diminishing land banks and prime sites with development potential are always hot property.

Orchard Scotts2Other significantly-priced properties which were sold off at the auctions included a 3-bedder apartment in Orchard Scotts for $2.35 million and a 4-bedder duplex at Seascape @ Sentosa Cove for $6.35 million. Property analysts are expecting property auctions to continue attracting bidders next year as the economy is expected to remain sluggish and most buyers are getting used to the property cooling measures. More are now quicker to commit, and may be even more keen to close deals before the end of 2016 arrives.

Post-brexit: Singaporeans still believe in value of London homes

Brexit may have rocked London’s real estate sector, but it does not seem to have rocked Singaporeans’ confidence in the market. In fact, their appetite for properties in London has continued to be rather voracious.

televisioncentrelondonPhoto credit: televisioncentre.com

More first-time buyers are reportedly entering the overseas investment market, and for many, the United Kingdom is one of the first non-Asian market they are dipping their toes into. The Brexit seems to have opened doors for these first-time investors who see the recent turn of events cultivating the prime time to enter the market. The weaker pound is one of the reasons Singaporeans are making their foray into the London property sector. In fact, property analysts and UK-based developers have reported seeing Singaporeans picking up London homes priced between £300,000 and £500,000. And most interestingly, majority of these buyers are HDB flat dwellers who see foreign property investments as more worthy than local properties.

lincolnsquarePhoto credit: The Lodha Group

Take for example Television Centre, a new mixed-use project in West London developed by Stanhope, which will yield 950 new homes amidst massive office, lifestyle and retail spaces and a hotel and even TV studios . Its first marketing effort outside of the UK had a sales target of 40 units. But thus far, it has already sold 45 units and a third of the buyers were from Singapore. Another property, Lincoln Square, marketed by Lodha UK, has also seen their sales doubling. Most buyers either have business links in London or have children who are studying in colleges nearby such as the London School of Economics and King’s College London.

Though property prices in London have been falling for half a year now, these new Singaporean investors are more keen on long-term gains, and see the current timing as optimal and to be taken advantage of.

Main factor for Australia’s property price-rise not foreign investment

The Canberra-based Australian Treasury has recently divulged the results of a study which showed that the main factor for rising property prices in Australia is not, contrary to popular belief, investment monies from foreign buyers but the strong foundation of household formation in the country.

sydneypropertyPerhaps it is a culture where citizens are keen to form new nuclear family units and to live in their own home which drives up demand for property, especially the main Aussie cities such as Sydney, Melbourne, Perth and Brisbane. The possible influx of foreign students in these cities could also mean locals are buying up properties to reap rental yields, thus pushing property prices upwards.

pacecollingwoodmelbourneSince 2008, property prices have risen more than 50 per cent, but only A$122 (S$129) of the A$12,800 increase in overall prices per quarter were attributed to foreign demand. That said, a total of A$24 billion in real estate investment monies from Chinese buyers have been approved in the year ending June 2015. This year, some states have begun to impose transaction taxes on foreign purchases of Australian properties and the study done by the treasury may have excluded properties purchased by locals for their overseas family members and relatives.

Will demand, local or foreign, wane and if so, how soon? Will prices slide gradually or continue to remain stagnant at its current levels?

 

Banking on rents to cover mortgages increasingly risky

As the rental market strains against the backdrop of a general economic slowdown and job security wobbles on its feet, the old ways of banking on rental yields to cover mortgage loans and other outlays on invested properties may no longer be a sure thing.

Alexis @ Alexandra CondoThe imbalance may be getting dangerously so even as the Monetary Authority of Singapore (MAS) has publicly warned investors against the risks of putting all their eggs in the property basket. They mentioned both property and corporate bonds as emerging risks, especially as growth is weak and the political situations across the globe is uncertain.

Rising vacancy rates and declining rental demand are the more concrete and obvious factors investors should consider before closing a deal simply because the total quantum prices are too good to be true. Before investing in overseas properties, currency fluctuations and political stability are also serious considerations, not to mention the strength and longevity of property and rental demand in a country not in close proximity.

la-rivere-2Although MAS has noted that most households here are able to weather an economic storm, if it does occur, those who have bitten off more than they can chew may want to reconsider their financial holding power and set their sights in the long-term rather than counting on their eggs hatching early.