Home prices down all around

Landed. Non-landed. Private. Public. Across the board, prices of all residential properties seem to have taken a hit in the last quarter.

Prices have dipped, some sectors more than the others, but signs are pointing to a possible slowdown in the market due to governmental curbs and the increased number of new property launches over the last 2 years. With the last price decline registered in 2005, resale HDB flat prices have been on the downhill slope for 2 quarters now. Private property prices have also suffered albeit to a lesser degree, with the lowest prices since 2009.

Mon JervoisMight it truly be the buyers’ market this year? Will this prompt more buyers to jump on the opportunity or are there other factors which might keep them away from the cash register? The tighter loan restrictions such as shorter loan periods, lower debt-to-income limits, and higher stamp duties may still be an obstacle to some buyers, thus sellers eager to cash in on their properties may find themselves having to wait a little longer for a good deal to come by.

Location usually still trumps all, though considerations such as space, amenities and living environment all have a part to play in the final selling price. With more new private condominium launches and new HDB flats pushing their way into the market this year, competition on the rental front is proving tough as well. Buyers now have more options for comparison and may be tempted to wait for prices to drop even further or wait it out for the best deal.

Even prices of suburban private homes, which have been the main stalwart of the property market last half of the year, have slipped 0.6 per cent. And as resale HDB flat prices drop, so have the number of HDB upgraders who may require the cash from the sale of their flats to purchase private homes. In turn, demand for mass-market suburban homes may fall.

Will it be a sombre year for Singapore’s residential property market?

Massive sales at Mass-market condominiums

Over the weekend, buyers turned up en-masse for a series of mass-market launches. Some were completely fresh out of the oven and some were launching a new round of units. These new properties are sprinkled across different districts and each had their plus points and investment value.

The 3 strongmen of the new condominium market this round are:

WhitehavenWhitehaven sold more than half of their 121 units. 70 apartments were picked up by eager buyers at an average price of $1,470 – $1,480 psf. A five-storey project developed by Roxy-Pacific Holdings, it does not have the bulk and density of other bigger condominiums but it does provide an exclusive and private atmosphere. And as a freehold project, prices are considered reasonable.

If you wish to go bigger, there is the 380-unit Stratum in Pasir Ris. It is a 99-year leasehold property, with a wide range of apartment sizes ranging from a 432 sq ft studio to a 2, 446 sq ft five-room duplex penthouse. In their first phase launch, 190 of 250 units released were sold over the weekend alone.

Corals at Keppel Bay previewed to intense response as well. Almost all of the 100 units released were sold and majority of the buyers were Singaporeans. Most of the units which moved were the one to three-bedders. As expected, buyers are savvy enough to recognise the investment value of this property, with it being near the HarbourFront MRT Station, and a number of amenities, entertainment spots and schools nearby. Prices at this 366-unit 99-year leasehold condominium were well spread across $1, 800 to $3,000 psf. And this is only the preview. What response will their official launch this weekend bring?

Belgravia villasAnd to whet the buyers’ appetite even further, a selection of other launches coming up include:

The long weekend is here. If you’re out house-hunting, there might be lots to look forward to.

Property prices’ sudden growth in Q4

Perhaps the property cooling measures are timely after all. What with the fourth quarter registering a sudden growth after a few months of slower movement.

Is the private property market quietening? Image courtesy of Singapore Tourism Board

Is the private property market really going to slow down? Image courtesy of Singapore Tourism Board

So in general, prices are still high, whatever dip in prices in the few months just before the end of 2012 were corrected by prices shooting up again, rounding off the year with a record-breaking run. The strong showing were in the resale HDB flat market, with a rise of 2.5 per cent and COV (cash-over-valuation) price increases, in particular for executive condominiums (ECs). The suburban private property market also saw equally strong demand, with prices up 3.8 per cent.

Developers, having paid high prices for their land bids, are not expected to drop their selling prices anytime soon, and their strong holding power will allow them to hold out till the market bounces back. Knight Frank research head Png Poh Soon is predicting a 5 to 7 per cent drop in high-end luxury home market this year, with a similar drop in mass market private homes prices.

Prices however, have considerably moderated over the years, ever since the first round of cooling measures rolled out in 2009. In the property boom of 2010, resale HDB flat prices rose a whooping 14 per cent; in 2011, prices rose 11 per cent; and in 2012, 6.6 per cent. The rise has slowed, but there is still a rise, nevertheless.

The interesting question will be, if prices are only allowed to go up, what will the property market be in like in say, 10 years? Will it be a case of what goes up must come down, or will more be priced out of property-ownership in the long run and put Singapore in the same league as major cities such as New York or Tokyo where renting is the way of life?

Properties with Pluses

Facilities previously considered bonuses or frills in luxury properties are now included more and more even in mass market condominiums. Sky gyms, yoga terraces, spa lounges, private jacuzzis, infinity pools, concierge services, aromatherapy gardens and even a community garden, yes where you can grow organic fruits and vegetables for your dinner table. It’ll be intriguing to see what else developers come up with in new launches planned for the year ahead.

Echelon

So then, what do luxury residential developments have to do to get the upper hand and justify their high prices? Well, at Hamilton Scotts, luxury apartment along Scotts Road near town, features en suite sky garages for each unit. So in Sentosa, you can sail right up to your doorstep, and here you drive up to yours. And The Marq at Paterson Hill, you get lap pools with a scenic view overlooking Orchard Road.

Hamilton Scotts

Hamilton Scotts

Property experts said that this growing trend could simply be an indication that the market is getting more competitive. However, there is a possibility that buyers will then increasingly take them for granted and begin to expect more for the prices they are paying. Do property buyers really know that they are paying for these extras, or would they rather have a simple unit in their ideal location? Will a sub-market emerge from this and spice up the already heated property sector?

Executive Condominiums expected to do well in 2013

As more EC sites are released, more new EC projects are launched, and more households qualify for one, activity in this sector is only set to increase in 2013.

Heron Bay Executive Condominium on Upper Serangoon Road.

Heron Bay Executive Condominium on Upper Serangoon Road.

opular executive condominiums include:

There does not yet seem to be an oversupply issue here, as compared to the mass market private property market or the luxury non-landed apartment sector. The market trend is indicating a widening of the price gap between a new executive condominium and a resale HDB flat; and a narrowing of that between a new executive condominium and a private condominium.

Recently there were some hype over bigger EC units which were selling beyond the $1 million mark. If this trend continues, and new EC units are priced higher and higher, might it cause a crunch in the resale HDB flat sector as some opt for the latter? Home buyers are now looking for properties that will go the mile in making their buck last. Areas such as Punggol and Serangoon where the ratio of private to public homes is lower than the national average, will continue to see active buying in the EC sector. Executive condominiums are a hybrid between private and public housing, where after the minimum occupation period of 5 years, they can be sold on the private property market; and after 10 years, they can be sold to foreigners.

Yishun HDB Flat

Reports show that there are currently 46, 000 households living in four and five-room HDB flats who, after the raised income ceiling of $10,000 to $12,000, will qualify for ECs. But does it necessarily mean that they will opt to upgrade to an EC? And even if they do, will they they want to put their resale HDB flat in the market for higher prices as they will now need more to pay for their new EC home? Is it merely a vicious cycle which will spiral upwards before a mighty fall? Or will the developers be the ultimate winners as more accept the higher home prices?

Home rentals – Record numbers in 2012

What could be the reason for a record number of 48, 000 leases this year? Does this signify a major shift in the preferences of home buyers and are more buying for investment purposes? Do more now own more than one property and will home rentals continue to reap in good profits in 2013?

Trilight

Median monthly rental prices for private condominiums have risen to $3.75 psf, driving tenants to look for smaller apartments. Luxury apartments however have seen a drop in rentals as corporate rental budgets may have been reduced. But as the number of new condominiums nearing completion rise, especially in the suburbs, will rental rates drop?

Industry experts are expecting an increase in the number of vacant units all across Singapore. The Urban Redevelopment Authority (URA) has mentioned a possible excess of 100, 000 units by Q3 and more than 35, 000 private homes will be ready by 2014.

Savills is however expecting a steady flow of rental yields with up to 49, 000 transactions as companies here continue to hire expatriate employees. Already more are leaning towards mass market homes in various districts around the island, veering away from the expensive prime district and city-centre options. Does this spell a possible change in dynamics in the property sector?

 

Property Price Rise in 2013

The dawn of a new year may bring great joy for property sellers as property experts expect a continual rise in property prices. Rising land costs may be the leading cause of the rise. And low interest rates will keep the buyers coming. Non-landed mass market homes are again expected to be the first in the race, running far ahead with a 10 to 15 per cent rise. The luxury property sector is also expected to rise, but at the lower margin of 3 to 5 per cent.

Singapore property condo

Neck in neck with the suburban mass market private homes are Executive Condominiums (ECs). This particular property type has been enjoying spectacular success with home buyers this year, and especially this quarter. By the end of 2012, the target sales of EC units will hit 4000. That’s still more than the number of units sold in 2010 and 2011 combined.

Despite the government’s efforts to cool the market, it seems to have a life of its own and the growth is too strong to be suppressed. What were the government’s motivation behind the cooling measures, and is it enough that those aspects are controlled, leaving those who can afford to push up overall prices? Or should the authorities be doing more to ensure that the little people and the middle class is still able to afford what they can.

Demand and supply. The balance awaits scrutiny. And the guessing game continues.

Executive Condominium prices = Private Condominium prices?

And it might be that way for a while more as new executive condominiums present luxe features, giving private mass market homes a run for their money. The current price gap is 17.2 per cent this year, down from 32.2 per cent in 2007′s property high. Executive condominiums are hot ticket property buys in the local real estate market.

Some of the pros of buying an executive condominium include:

1. The income ceiling for ECs has increased to $12, 000 per household, thus if you earn less than that, you are still eligible for a housing grant from HDB.

2. After the minimum occupation period (MOP) of 5 years, the EC unit can be sold to Singaporeans and Permanent Residents in the open private property market.

3. After 10 year, the EC unit can then be sold to foreigners.

Property buyers see a great deal of rising value in this particular property type. And it is usually the areas where EC units are limited that see the most active sales. Districts with the greatest number of resale ECs are usually those with the narrowest price gaps.  Areas such as Bishan and Ang Mo Kio, and Pasir Ris, Simei and Tampines, saw the narrowest price gap of 10 per cent whereas in Sengkang, Punggol and Hougang, the price gap was 22.4 per cent. Average psf of units at Bishan Loft and Nuovo in Ang Mo Kio is only $100,000 below the average price psf of private condominiums in the same district.

The recent EC launches, CityLife in Tampines for example, has pushed this market up a notch into the private property arena with its  luxury penthouse, infinity pool and sky terraces.

Is this narrowing of the price gap between public and private housing a true reflection of the housing situation in Singapore?  If the rise in prices continue, would the Executive Condominium market eventually suffer the same fate as the Design Build and Sell Scheme (DBSS)? In the end, the only question we are truly left with is, should it be that way?