Property cooling measures likely to remain

The economic slowdown and diminishing growth rates are causes for concern not only for the Singapore government, but also for consumers and businesses.

National Development Minister Lawrence Wong has recently spoken about the property cooling measures which were implemented in succession over the past three years. He has mentioned that they are likely to remain at this time of uncertainty as a response to “global context and environment”.

Kingsford HIllview PeakProperty prices have fallen 10.8 per cent since Q3 of 2013 and prices fell 1.5 per cent in the third quarter of this year, bringing it to the 12th consecutive quarter of price decline. The real estate industry currently faces stagnation and though interest rates are low, many are looking for higher yields. He has warned against creating an environment rife with property speculation and has said that capital inflow might create a volatile and highly-speculative atmosphere which will result in property market fluctuations.

With the high number of completed units entering the market this year, and with unsold inventory rising, the property cooling measures may be helpful in keeping the delicate market balance. As of Q2 this year, there were 21,500 unsold and uncompleted private homes, the lowest ever recorded, indicating a possible shift of influence from the seller to the buyer. The government has also held back on the launch of land sites earlier this year.

Meyerise2Property analysts are not surprised by the government’s move to keep the property curbs in place, though sudden pace changes and steeper declines might prompt the government to reconsider relaxing the rules sooner.

Fall in Q3 Private home prices

Private home prices have been falling for the past 3 years, 12 consecutive quarters to be exact, and it’s currently at it’s lowest in 7 years. Last quarter’s fall was the steepest at 1.5%. So it does seem like the property cooling measures which were rolled out at around the same time have worked. And while the authorities are committed to continue having them in place, the real estate industry might have to bite down hard and stay the course.

threebalmoralEffects from the general global, regional and local economic markets have trickled down to the property sector as worry about the job market and a weakening economy affects demand and risk-taking. Though interest in high-end core central region luxury properties may have improved, prices have yet to completely made a turnaround. Home prices in this segment fell the hardest at 1.8 per cent following a 0.3 per cent rise in Q2. Landed property prices also fell 2.2 per cent while previously in-demand city fringe properties saw a 1.3 per cent fall.

As the last quarter of the year will possibly see more new property launches in comparison to Q3 which was relatively quiet, and HDB rolls out its next launch of 5,090 new BTO flats in Bedok, Bidadari, Punggol and Kallang/Whampoa HDB estates in November, will existing unsold stock and resale private homes be on the receiving end of added pressure and competition?

Consumer awareness crucial for property industry

The local property industry landscape has been changing quite a bit over the past few years, in particular for the consumer. The authorities have been working on transparency and consumers now have more information at their finger tips, and perhaps even more as net prices of de-licensed projects’ will soon be available as well.

singapore-property-authoritiesCurrently, the Housing Development Board (HDB) and Urban Redevelopment Authority (URA) both provide property statistics and data on their websites. The Singapore Residential Price Index (SRPI) by the National University of Singapore (NUS) Institute of Real Estate also provides month-on-month transaction-based information for private non-landed residential properties.

ardmorethreeThere are however some caveats to take into consideration. URA’s quarterly price index for example, does not include the discounts and incentives which developers sometimes provide. Only the net-price will be recorded, thus consumers will do well to take this into consideration when viewing statistics and median monthly transaction prices. The change will take effect this month, which means the price index may have some downward pressure put on it as current figures may be inflated. De-licensed projects which have obtained their Certificate of Statutory Completion and thus do not come under the Housing Developers Rules, such as OUE Twin Peaks and Ardmore Three, are known to provide incentive schemes to their buyers such as 15% discounts and Additional Buyer’s Stamp Duty (ABSD) rebate.

A recent case of a property agent who handled and misappropriated cash handed to him by his client also brings to light that consumers may not be entirely aware of what they are entitled to or what their agents are allowed and disallowed to do. In brief, it is against the law for property agents to handle any cash on behalf of their clients.

More luxury homes above $5 million sold this year

The difference is 198 per cent – for Indonesians keeping their cash overseas without declaring it and in Indonesia for at least 3 years. And that whooping amount is possibly pushing wealthy Indonesians to pick up luxury properties in Singapore before the new law kicks in. Singapore will soon be sharing financial information with Indonesian authorities.

The TomlinsonAt the moment under a tax amnesty scheme, Indonesians pay a tax rate of 4 per cent and upwards on properties or funds outside of Indonesia. The rates are increased in stages up to 10 per cent up till March 2017, when the amnesty closes. It is uncertain if the information shared will be of both real estate and funds, but some buyers are understandably moving their monies into real estate ahead of time.

Local properties priced at $5 million and above have been attracting interest from Indonesians who have been closing deals quickly over the year. The number of such properties sold this year have already far surpassed last year’s, by almost 4 times. 30 properties valued at $5 million and above have been sold this year as of August, compared to just 8 the whole of last year.

Whitley ResidencesMost Indonesian buyers see the potential of high-end Singaporean properties and have been keeping an eye on the market, waiting for an opportune time to pick off prime properties. A total of 189 purchases, and possibly more as declarations of nationality is voluntary, were made by Indonesians from January to August this year.

More resale condominiums sold in July and August

Current Q3 property market figures are showing that while sales volume on a year-on-year basis has risen almost 60 per cent, with a 10 per cent rise in June and inching up a further 5.3 per cent in July, home prices have slipped consecutively for 2 months.

183 LonghausA total of 817 units were sold in August while 776 were sold in July. Prices of resale non-landed residential properties have however fallen by 0.8 per cent in August, following a 0.7 per cent fall in July. Most of the price decline came from suburban properties, led by those in the city fringes. The core central region private home prices have continued to rise 0.1 per cent. Overall, buyers are paying an average of $11,000 below market value last month as compared to $10,000 in July.

A few major new launches may have injected some competition into the market, fuelled by the rise in the number of completed private homes. District 20 of Ang Mo Kio, Upper Thomson and Bishan has however had a positive showing of buyers willing to pay up to a median of $18,000 above market value for properties here. The maturity of these estates, coupled with the number of schools and proximity to town may have driven prices up. Surprisingly in district 15 which consists of Katong, Marine Parade, Joo Chiat and Amber Road, buyers are shying away from the high prices properties here used to command.

Belgravia villasThe Hungry Ghost Festival in August may have dulled sales figures slightly, though property analysts expect only marginal adjustments in the months leading to the end of 2016.

New Jurong launch boosts July’s private home sales

MCL Land‘s Lake Grande took the lead in July’s property sales with 42.5 per cent of the month’s sales coming from this development. 464 out of its 500 units have already been sold at the median price of $1,368 psf.

LakeGrandeAcross the board, new private home sales have hit a one-year high last month with 825 suburban new private homes sold. In the city fringes and central districts, 213 and 53 units were sold respectively. This could be partly due to the rise in number of units launched, 624 in total, in July plus investors are taking advantage of the low interest rates and lower property prices to buy up available units with long-term potential.

Though the government has not yet eased up on the property cooling measures, they have held back the release of new land plots this year, which could have in turn helped clear unsold inventory. The executive condominium (EC) market is coming out strong with 830 units snapped up in July, more than thrice the 232 units sold in June. The 2 major EC launches last month were Treasure Crest in Anchorvale Cresecent and Northwave in Woodlands.

NorthwaveECPhoto credit: MCC Land

August may be a slower month as fewer deals are likely to be closed during the Hungry Ghost month, but as long as interest rates remain low, buyers will continue to scour the market for good deals. Property analysts are expecting the positive sentiments and increased interest to carry on to the end of the year.

Signs of property market bottoming out?  

Though the vacancy rates of private residential properties are currently 1.4 percent higher in Q2 and at a 16-year record high, and property prices 9.4 percent lower than the 2013 peak, property analysts remain positive about the outlook as these could be signs that the property market is reaching the bottom of its cycle.

7478d455d05b4f2aa26fd1e5a8ce7bd2There were 30,310 vacant private homes in the second quarter, that is 5,391 units more than in Q1. As the number of completed properties rise, with almost 11,400 new units entering the market in the first half of 2016, the rates are seemingly modest. Property prices have also been stabilizing, and as long as interest rates remain at their current level, most households will be likely to be able to hold on to their properties over the down season.

More property buyers are now making home purchases for their own use instead of pure investment purposes and many are taking the opportunity to seal deals during this quieter time. In a year-on-year comparison, sales volume has risen 11 per cent and the luxury property market in particular is enjoying a spike in buying interest as prices have fallen sufficiently, luring buyers back into the high-end property market.




Jurong Lake District – New sparkling Gem of the West

In less than 2 decades, the landscape of Singapore’s west-side could be said to be almost completely transformed. From the largely industrial factory districts to far-flung housing estates and only a few schools, new shopping malls, transport hubs, commercial and office spaces, private residential homes and spanking new build-to-order (BTO) flats now dot the scene.


Photo credit: URA

Jurong, once a busy but secondary commercial district, has been slated for development as Singapore’s second central business district (CBD). Every large city is almost certain to have one secondary commercial hub, as big and functional as the town-centre CBD, but newer and with more space for development. Just thing of Shanghia’s Pudong or London’s Canary Wharf. The Urban Redevelopment Authority (URA) is looking to transform the Jurong Lake District into a eco-friendly, futuristic township with homes, offices, hotels and filled with greenery and waterways.

LakeGrandeWith the Kuala Lumpur-Singapore high speed rail in its midst and as the convergence point of a number of new and existing MRT lines, there seems to be quite a far breadth for value appreciation of residential and commercial properties in the Jurong Lake district.

With Punggol and Jurong both set to include many good, new things may be coming the country’s way in the next decade or two.