Private home sales – Will the decline continue?

The property market has been softening. The decline seemed inevitable, especially as completed new private homes flood the market in the upcoming year or two.

Not surprisingly, shoebox apartments saw the largest dip in sales as the number of units are somewhat saturated. Buying power is also now lower and buyers who were initially looking at these units for investment may no longer be able to get the loans they need.

 

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Rental issues such as the age, functionality and location of resale units now have to compete with the newer and sometimes faster property models. In the central districts, the decline in rents and sales of apartments were most evident. This could be due to the number of unsold high-end properties in these areas. Even suburban condominiums are feeling the heat as many expatriates shun them as they often do not provide the convenience and exclusivity they desire.

Whether the effect will transfer to the HDB resale market also awaits to be seen. As HDB upgraders who are moving to their completed units will have to let go of their HDB units within a specified time period, many may be in a hurry to let go of their units and possibly at lower prices than before as the market gets competitive. Pair this up with a diminishing market for smaller units as singles are now able to purchase new flats from HDB directly, as well as a smaller pool of permanent residents, the property market seems to be in for quite the turn this year.

Even as more new property launches are promised, how private home sales fare the next quarter may set the mood for the rest of the year.

Private condo units – Buy 15 in a go

As the property cycle could be heading towards its low point, property developers are eager to find ways to let go of remaining units in order to recoup losses or earn whatever profits are left.

Some have taken to offering discounts or freebies, whilst others have are even offering bulk sales of units at lower prices. Buyers are now more cautious about their purchases and with lending limits being restricted, many are now unable to afford additional property purchases. Most of these would be the middle to upper-middle classes who eye small private apartment units as potential for rental revenues. But as rental demand dips, they may think twice.

Newton Imperial21 units of the 36-unit condominium, Newton Imperial has been put up for bulk sale recently for possibly between $65 to $72 million. Only 15 units of the Great Newton Properties owned condominium development has been sold since its completion in 2011, most of which are to foreigners. The Newton and Novena area is known to be popular with expatriates and was once in hot demand as its city fringe location made its properties highly valuable. Most of the apartments in Newton Imperial are three-bedroom units.

Though bulk sales are a risky investment, there might still be a chance of profits, especially if the units are designed to suit specific tastes and are in the right location. Rental of private apartment units in Newton are at an average of $8, 000 psf. Units at the Newton Imperial were previously sold at approximately $1, 880 psf. Nearby, other private establishments such as L’Viv and 26 Newton are selling units at $2, 100 to $2,600 psf.

What lies in the future of private properties? Is the market headed towards a downward spiral and at what speed?

Median COV on the fast decline

It was not too long ago that Cash-over-valuation (COV) prices for resale HDB flats dominated the headlines. The rarer and more highly-in-demand the unit, the higher it went. HDB flats were being sold at close to the million dollar mark, with a few pulling ahead and making it across.

But the weakening property market has meant a dip in demand in resale flats and sellers now find themselves lowering their asking COV prices, or even selling prices, especially if there is some urgency involved in selling their HDB flat. From the median of $11, 444 in October, COV prices are now at $8, 000 in November. There were expectations that it will regain its foothold at $10, 000 by year-end. But the future seems a little foggy at the moment.

HDB Flats THinkStockPhoto source: ThinkStock

What are the factors causing this decline? And will these reasons resolve themselves in the new year?

  • Housing curbs. Stricter loan limits means buyers now have lesser to spend and affordability of their property purchases will now take priority in their decision-making process.
  • Less demand for resale units overall. As new private properties launch at an increasingly rapid pace, with smaller units available at lower prices, the popularity of public housing may continue to wan.
  • Less demand for resale units in popular estates. As more BTO flats are rolled out, with some in mature estates, buyers may be drawn to apply for these instead of buying a unit off the resale market, especially if they are not in a hurry and location is not as crucial a deciding factor.
  • Increasing number of HDB upgraders. As suburban condominiums become a more viable and popular option, there may be more HDB upgraders looking to sell their flats in order to purchase private, but this would also mean a growing pool of sellers looking to let go of their flat and hence diluting the intensity of the market.

Considering the fact that July 2009 was the last time COV prices fell below $10,000, the recent $8,000 mark could be one of the lowest in the last five years. In fact, some sellers are now offering their units for sale without any cash premium, and even at prices below valuation. But these cases could be few and far in between as resale units in popular HDB estates are still rare and may fetch reasonable prices.

Double Happiness for DUO Residences

It looks like an early christmas for developers of DUO Residences in the Rochor district. With less than 100 units left since its launch last weekend, business has been brisk, to say the least. As an inaugural project between Temasek Holdings and Khazanah Nasional, bumper sales made the day.

DUO Residences78 per cent of the buyers were Singaporeans and Malaysians made up for 16 per cent of the foreign buyers, with Chinese, Indonesian and American buyers making up the rest of the numbers. DUO Residences’ mixed-use development title has been the main attraction of the property. Buyers like the convenience and centrality of the DUO, which is situated near Kampong Glam. There are 660 units in total within the 49-storey residential block and the project will also contain a 39-storey commercial and hotel complex. Being situated near the town centre and Central Business District makes the DUO investor-worthy.

The average selling price of the 468 units sold as of last Saturday stood at $2, 000 psf. 540 units were released during the launch. Though industry players are expecting the recent turn out at the DUO to water down response at future launches, others say that each property’s unique selling points and locations may make for a different pool of investors. So, if you’re looking out for similar projects, then Guocoland‘s Clermont Reisdences and City Development‘s South Beach could also be hot sellers.

Inflora in bloom

The new condominium on Flora Drive has bloomed. At its launch last Friday, 250 of its 396 units at The Inflora were already sold. That leaves only slightly more than one-third. Situated conveniently near the Changi Airport and also the Japanese Primary School and the new Singapore University of Technology and Design, it were the smaller apartments which flew off the shelves first.

This trend of investing in smaller units which have a more affordable quantum and higher target rate for rentals seem to continue well into the fourth quarter of the year. And because of the cap on the number smaller sized units, its rarity helps increase its salability as well as rental popularity.

The Inflora1At The Inflora, a one-bedder goes for around $400, 000. Very affordable as an initial foray into property investment. All of its 128 one-bedders and 136 two-bedders have be fully sold. The apartments ranged between 462 sq ft to 882 sq ft. In addition, there are 84 three-bedroom apartments of around 1, 033 to 1, 583 sq ft. Its four-bedders are a little smaller sized at 1, 302 to 1, 334 sq ft. Dual-key units which are also popular with families looking to purchase a unit for their own occupation area also available, with sizes ranging between 1, 463 to 1, 584 sq ft. The attractively low total prices, around $960 psf, have been the main draw.

Home buyers quick on their feet have leaped at the opportunity as the area is relatively undeveloped. But as more properties are built in the area, they are expecting prices to follow the same thread.

Q3 spells trouble for Singapore’s real estate market

Suburban, city fringe, prime districts, city centre. All around, property prices and transactions were on the way down. Possibly at its lowest since 2009, only 2, 200 to 2, 400 new homes were sold in the last 3 months. Less than 100 new homes were sold in the city centre an less than 150 in the city fringes. In the suburban areas, the number was almost halved from 1, 050 units in H1 to less than 600 in July and August.

Sky VueProperty agents and industry experts are putting the drop down to the new TDSR (total debt servicing ratio) framework which the Monetary Authority of Singapore implemented in June this year. But with the recent new launches, the numbers may improve marginally, especially as foreign buyers return after the initial pauses caused by stamp duty hikes earlier in the year. Executive Condominium (EC) Waterwoods and Skypark Residences, The Skywoods, Sky Vue and Thomson Three private apartments were some of the latest offerings on the home buyers’ plates.

As the year draws to an end, there are almost 2 more months for the property market to respond. Will developers sense the lull and boost sales with discounts and other offers? Or will buyers realise the opportune time to come back and snap up units at the latest launches?

Waterwoods – Luxury in this neck of the woods

Private lift lobbies. Maisonettes. This are just a few of the lovely features at the Waterwoods executive condominium (EC) launched recently in Punggol East. Out of the 373 units, there will be 16 maisonettes and 32 five-bedders (there will be 49 in total) will have private lift lobbies. The project is developed by Sing Holdings and UE E&C and will also feature penthouses.

Waterwoods Punggol ECExecutive condominiums are a hybrid between private and public housing. Buyers can apply for grants from HDB and after the minimum occupation period, are able to sell the properties on the open market as private condominiums. After 10 years, selling of the units to foreigners is also possible. As resale HDB flats’ popularity take a hit, the rising popularity of ECs is certainly understandable, as their pricing is often comparable to resale HDB flats, but yet often well under private apartment prices. It also helps that these ECs often come with amenities and are located in prime locations, near MRT stations or bus interchanges, for example.

Other recent EC launches include Lush Acres in Sengkang and Ecopolitan in Punggol with prices averaging $790 psf. Prices at Waterwoods are expected to vary within the same range as well. E-applications have been open since 27 September and will close on 6 October.

Property Action heats up in District 20

First there was Thomson Three. Which sold 160 units sold within the first day of its launch last week.

Now there’s Sky Vue in Bishan. And by the number of agents handing out flyers in the Bishan and Ang Mo Kio areas alone, it will be surprising if the new condominium near the Bishan MRT station and Junction 8 does not receive a more than welcoming response from home buyers.
Sky Vue
Despite being just 15 minutes drive away from each other, Thomson Three and Sky Vue are about just as far apart in its unique selling points as night and day. Both are condominium developments but Thomson Three also has 10 semi-detached strata housing units in its midsts and is situated near landed homes in a mainly residential area.

The much larger Sky Vue has 694 units as compared to Thomson Three’s 445 units. And it will stand in the highly populated Bishan Street 14, putting it very close to well-developed transport nodes such as the Bishan MRT station, bus interchange and other amenities such as Junction 8 shopping mall, CPF building, the Bishan Library and other established education institutions such as Raffles Institution and Catholic High.

Thomson Three 1Thomson Three may be just that little bit behind in that the Thomson Line will only be ready in 2020. But it does promise a more exclusive, relaxed and nature-loving environment being near the MacRitchie and Pierce reservoirs. It also doesn’t lack behind with St. Nicholas Girls’ school and Ai Tong Primary school nearby.

On a price comparison, Sky Vue units are costing $1, 380 psf on the average and units at Thomson Three are going for $1, 550 psf. Bigger apartments at Thomson Three however may have higher psf prices. A two-bedder at Sky Vue goes for $852, 000 while the same at Thomson Three starts at $945, 000. With both these areas becoming more popular with expatriates looking out of the central and town areas for rental options, private properties old and perhaps especially new, may benefit.