Home prices fell slightly in Q2. Bottom could be in sight.

Home prices of private residential properties fell by 0.3% in the last quarter, though it is nothing to fret over as it is the smallest dip since Q4 of 2013, which was when prices started to show a decline.

Thomson Grand3Since the April 2013 peak, private home prices have fallen 11.6%. Nothing too alarming considering the rate of its fall, but nothing to scoff at either. After a year or so of buyers retreating from the market in wait of prices falling further, new launches this year have brought them out of the shadows and the overall market sentiment has been positive thus far.

The first indication of a possible market recovery in the near future is the slowdown in rate of decline of property prices. This could indicate that the bottom is nearing and may draw even more buyers into actually committing to a purchase – when the price is right.

Non-landed private residential properties in the “rest of central region” such as Marine Parade and Bishan fared the best last quarter, with a 0.5% growth. The core central region saw the steepest fall of 0.9% as most of the transactions recorded were from older establishments and from mortgagee sales.

Activity in the landed property market is surprisingly heightened last quarter, with 527 units sold, a whooping 56.8 per cent higher than in Q1. In the resale HDB flat front, prices fell very slightly at 0.1%, a smaller decrease compared to the 0.5% in Q1, though sustained interest may be questioned here as more buyers could be considering upgrading into the private property market as older HDB flats with fewer years left in their lease may mean fewer takers.

2 months of declining new private home sales nothing to fret about

The roller coaster ride of the real estate market has hit a gentle slope with regards to the new private home sector as sales volume fell for the 2nd month in a row since April, mainly due to the lack of new launches in recent months.

MartinModernWith 1, 024 homes sold directly by developers in May, the number of new private homes sold registered a 34 per cent drop from the 1,558 units sold in April. This follows a 12.5 per cent fall from March. The year-on-year figure also showed fewer homes were sold last month than in May 2016. To be fair, only 339 new units were launched in May compared, about 5 times less than the 1,616 units launched in April and no new executive condominium (EC) units were launched last month.

The 2 months of declining sales are nothing to fret too much about as the number of new private homes sold in the first 5 months of the year has surpassed that in the same period last year. 5,723 units were sold from January to May this year. Property analysts expect the buying momentum which began in the earlier part of the year to carry on through the rest of H2 as buyers are beginning to realise that the market has probably reached or is nearing the bottom after 3 years of declining prices.

HundredPalmsPhoto credit: hundredpalmsresidences.com

June however could be a challenging month for the market since it is the school holidays. But H2 looks to be promising with the expected launch of a number of new projects including the executive condominium development Hundred Palms Residences, Martin Modern and Le Quest.

2.11-hectare residential site in Queenstown up for sale

With a $685 million bid, sales of a new residential land site in Queenstown has been triggered. The reduction in land sales under the Government Land Sales programme has seen older properties more keen to go on the en bloc sales route, and developers have shown their eagerness in procuring land sites as market sentiment continues to improve.

queenspeak2This latest land site is a 2.11 hectare plot on Stirling Road with the propensity to yield 1,110 new private home units. This site was placed under the Urban Redevelopment Authority’s reserve list in 2010 which means it will only go on sale should the Government receive a bid of an acceptable level. The size of the plot can be credited to the combination of 2 adjacent sites which were merged into 1 in 2012. The 99-year leasehold site is near Anchorpoint Shopping Centre, Ikea, Queensway shopping centre and just a few stops way from the Bukit Merah bus interchange and Redhill and Queenstown MRT stations.

As the site is within walkable distance from Queenstown MRT station, property analysts anticipate competitive bidding this time round. The maximum floor area of the site comes up to 954,328 sq ft or approximately $718 psf though joint ventures for a land plot this size seems likely and bids are expected to vary from $838 to $950 psf.

Commonwealth TowersThe site is expected to receive from between 7 to 11 bids. Nearby properties which could set the precedent for pricing are the Commonwealth Towers and Queens Peak condominiums. Current prices at both developments stand at $1,654 and $1, 640 psf respectively. Projects in the vicinity have been selling well, especially with the recent lifting of the property curbs and a general lift in consumer sentiment.

Resale condominium prices slide in February

The latest private resale condominium sales figures seem to slightly challenge industry experts’ expectations of the market bottoming out this year.

Marina One ResidencesFebruary’s resale condominium prices fell 0.3 per cent following a 0.1 per cent in January from December last year, indicating further decline in the private non-landed resale property sector. While the numbers could mean the market has yet to bottom out, the slower rate of decline does point towards a state of stabilisation.

The biggest impact was felt in the central region (made up of districts 1 to 4, 9 and 10, the financial district and Sentosa Cove) where a 1 per cent fall was registered following a hopeful 0.5 per cent rise in January. Even in the small-apartments (units 506 sq ft and below) segment, prices fell 0.6 per cent. Resale units outside of the central region however fared better, coming back up top with a 0.3 per cent rise following a 0.6 per cent fall from December.

Oceanfront Sentosa Cove CondoThough market sentiment has been picking up, the overall economic outlook and rising interest rates may not be enough to completely turn the market on its head. Recent tweaks in the property cooling measures may give the industry a little push towards to the direction of recovery, but property analysts are still expecting a 3 to 4 per cent price-decline by end of 2017.

Resale private home prices up for 4th consecutive month

3 months into the new year and things seem to be looking up for the resale non-landed private home sector. Prices have been on the rise for the fourth consecutive month with a 0.9 per cent climb last month, following a 0.6, 0.3 and 1 per cent rise respectively in the months counting up from December last year.

ParkInfiniaRecent industry figures have shown a slight recovery in both prices and sales volume in the resale market, mostly due to an overall more upbeat atmosphere boosted by a series of successful new launches within the first 3 months of the year. Approximately 694 private non-landed residential units were resold in February albeit it being the shortest month of the year. That is 31.2 per cent higher than the 529 units which exchanged hands in January though that could have been because of the Chinese New Year holidays.

Comparing year-on-year, resale prices in February this year clocked at 1.8 per cent higher that the last and resale volume was 77.9 per cent higher than the 390 units sold the same month last year. Compared to the price peak in 2014, resale private non-landed home prices is still lagging by 6 per cent, but considering the lull which took over the real estate sector for the past 2 to 3 years, price increases across the island in this segment is a step in the right direction. Prices in the prime districts rose 1 per cent while inching up 0.8 per cent in the city fringes and 0.9 per cent in the outside central regions.

 

Weak rental market not an obstacle for investors

While the weakening rental market may have been putting pressure on investors, the concurrent weakening private property prices are opportunities to some. While the leasing market has slowed down considerably, the property-purchasing market has been gaining speed, especially in the last quarter or so.

TRE ResidencesThe overall genial atmosphere in the private residential property market over the past few months have brought property investors back into the heat of things. As more newly completed properties enter the market and new projects such as The Clement Canopy and Grandeur Park Residences were launched to affirmative responses early in the year. Overall private home prices fell at the slowest rate in 3 years, which could point to an increasingly stabilising market.

It would be prudent however for investors to take into consideration that the property cooling measures have not yet been lifted, though some signs of relief have been provided earlier this month. In the past, profits of up to 60 per cent could be reaped in the short-term, but the long-term potential of a property, rather than quick turnarounds or a dependency on rental profits, will be at the heart of a good investment henceforth. Property analysts advise investors to consider cash-flow, calculate mortgage and maintenance costs carefully while keeping a portion aside for periods of negative cash flow when  the property is unable to be tenanted.

Demand for Hong Kong properties continue to climb

Home prices in Hong Kong are escalating despite the government’s attempts to curb the rapid and steep climb.

OneKaiTak1Photo credit: www.onekt.com.hk/

Buying a resale private property from the secondary market has become difficult due to the heavy stamp duties levied by the Hong Kong government on open market homes in an effort to curb rising property prices and a ballooning market. Stamp duties for first-time local buyers are particularly high and the move has slowed down activity in the secondary market considerably. Instead, it has created a demand for new homes in the primary market. Since homes in this market are sold directly by the developers, they are able to adjust home prices according to market demand and requirements, sometimes even offering incentives and discounts.

In the first month of 2016, the demand for new homes fell by 76 per cent. In the same time this year, it rose by 48 per cent. A complete turnaround. With the current lack of interest and activity in the secondary market, developers are  ceasing the current window of opportunity by its neck and adjusting prices according to rising demand. And the demand is high indeed. At China Overseas Land & Investment‘s new residential project situated on the site of the old Hong Kong airport, One Kai Tak, all 188 units were sold out in a single day last month.

OneKaiTak3Buyers may ramp up their buying speed and fervency in the months ahead, as they pre-empt the possibility of the Hong Kong government implementing further curbs on the market, in particular on individuals who sell their properties to purchase new ones.

Rise in new private home sales volume

The number of new private homes sold last year have risen on the back of declining prices in the primary private home sales market. Fighting against predictions of a languishing private residential sector, new private home sales have held up in 2016 with 8,136 new units sold, 9.4 per cent higher than 2015’s 7,440.

SantoriniBuyers have been picking up units directly from developers, aided by a couple of pushes from low interest rates an and lower selling prices. Though 2016 was a slow year for Singapore’s real estate industry in terms of home prices, the number of transactions clocked have surprisingly went against all odds. While private home prices have fallen over the past 3 years, market sentiments have begun to pick up last year and increased interest and availability of one- and two-bedroom units whose total quantum prices were more palatable for the general buying public and investors alike.

In Q4 of 2016, 2,480 new units were sold, the highest number in a quarter for the year. Despite the year end’s usual market lull and only 90 new units launched in the last quarter, December’s sales were positive with suburban projects leading the way with 231 sales, followed by 112 in the city fringes and 24 in the core central region. Last month’s best seller was The Santorini in Tampines which sold 26 units at an average price of $1,046 psf.