Resale HDB market sees rise in sales

The number of resale HDB flats exchanging hands in April rose by 10.3%, a positive sign despite prices remaining level. The last time sales volume exceeded the 1,800-unit mark was in October 2012. 1,828 units were sold in April this year.

Though property analysts are wary about calling this a market rebound, the increase in transactions could mean an eventual decrease in the number of resale flats available. Depending on how far the price gap between private property and resale HDB flats goes, the diminishing stock of resale flats in the market may entice buyers to purchase sooner rather than later. And the increase in rarity could also mean the increase in prices.

Serangoon HDB flatFor the moment however, the buyers may still have the upper hand as most are buying only after having waited for prices to fall. The cash-over-valuation prices are almost all gone, and with the purchasing process adjusted, buyers are less likely to fork out additional monies above the valuation price. In addition, data pertaining to resale flat prices can now be more easily accessed, thus buyers are seldom willing to succumb to sellers’ high asking prices.

HDB flat prices have stagnated for almost a year now, though the fluctuation either ways has not been drastic. Last month for example, 3-room flat prices rose by 0.6 per cent though 5-room flat prices fell by 0.9 per cent. This could be an indication of what the buyers are now looking for. As the population and policies shift, the property market will also need to adapt quickly to their changing needs.

Private home prices dip for 10 consecutive quarters

The delicate balance between population growth, economy growth and housing provision is not an easy one to strike. And Singapore as a young nation, will have to learn quickly as land is limited but the number of completed units to enter the market in the next couple of years is set to reach 23,000.

Cairnhill Nine CapitaLand

Photo credit: Cairnhill Nine by CapitaLand

Private property prices have been dipping for 10 consecutive quarters now, and the market will be under even greater pressure in the months ahead as supply continues to increase while demand remains stagnant. Rental prices are expected to fall even faster than sale prices and the global economic situation does not seem to be helping. Prices have fallen 9.1 per cent since Q3 of 2013 and non-landed suburban properties in the OCR (outside of central region) fell the hardest.

Part of the reason for the falling figures could be the cutback on land sales by the government and the consequent lack of new launches. Only 953 units were launched in Q1, but property players are expecting the momentum to pick up as the year moves on.

It the first quarter’s numbers were anything to go by, with sales rising 7.2 per cent to 2,847 units, volume may have increased across both the new and resale private home markets.

 

Prices of suburban properties dipping

Prices of new properties in the prime central districts have been rising, even as the market dulls. Suburban homes are feeling the strain put on the market by the influx of completed new homes this year.

The PanoramaBuyers seeking out properties in the suburbs tend to be more price-sensitive, and are often hampered by the total debt servicing ratio (TDSR) framework and the additional buyers’ stamp duty (ABSD), leading to higher competition from an expanding pool of stock for a shrinking pool of ready buyers. Prices at The Panorama in Ang Mo Kio have fell 9.7 per cent since its launch to $1,213 psf and similarly in Clementi, units at The Trilinq are now priced around $1,408 psf, almost 9 per cent lower than its launch price.

In comparison, buyers of properties in the prime central districts are more affluent and are able to afford the prices properties here demand. For example at Robin Residences, selling prices are now hovering at $2,371 psf, 2.4 per cent higher than its launch-price. Buyers of centrally located properties also have stronger holding power and less likely to sell unless the price is right.

RObin ResidencesThe price gap between suburban and central district homes have been widening. Last year, CCR (core central region) new-home price premiums were 81 per cent over those in the OCR (outside central region). As more OCR homes hit the secondary market this year, how will smaller investors handle the competition?

 

Rental market bodes well for HDB flats

The rental market has been on the downhill slip as a fresh crop of completed new private homes hits the market this year. Competition for an increasing limiting tenant pool will prove to be tough for private property landlords, but HDB flat rental prices are holding out well despite the softening rental market.

Paterson SuitesCore central region private apartments seem to be suffering the most with the global finance, oil and gas sectors in turmoil. Expatriates working here and their families have been moving out of the country, scaling the tenant pool for luxury and high-end prime properties down even further. For example, a 3-bedder in a 1,600 sq ft unit in Paterson Suites which would have tenanted at $7,000 in January is now offering $5,800 in rent.

Serangoon HDB flatPrivate property rental prices fell 1 per cent in March, while HDB flat rents fell just 0.1 per cent. Changes in immigration policies have reduced the foreign workforce in Singapore and those remaining may have to work around a smaller housing allowance, hence many private properties may be out of their rental budget. HDB flats are a fair and affordable option. For locals or HDB upgraders who have to rent a home while waiting for their new BTO flat or condominium to be built, private units often prove to be too expensive as well. Will the positive rental yields for the HDB flat market boost the sales figures for this sector?

 

 

Fewer resale flats entering HDB market

A good number of new HDB flats have reached or will soon reach the end of the minimum occupation period (MOP), and despite the expected slew of relatively new resale HDB flats entering the market, the situation is contrary.

CIty View Boon KengPhoto: City view @ Boon Keng (credit: Hoi Hup Realty Pte Ltd)

Some units in prime locations and prime developments such as the Pinnacle @ Duxton and City View @ Boon Keng may have fetched record prices, but most owners are not in a rush to put their units up for sale as the resale market is currently slow.

In 2010, 1,338 units were sold within a year of reaching their MOP, about 13.7% of the number of newly eligible flats. By last year, there were only 388 such transactions, at about 6%. Though private property prices have fallen, the gap between public and private housing remains considerable; and with a slowing market, resale flats may not be able to command the prices of before.

Pinnacle @ Duxton was awarded the 2011 Urban Land Institute (ULI) Global Awards for Excellence. Image by HDB.

Pinnacle @ Duxton. Image by HDB.

The upperhand-tussle between buyers and sellers have been ongoing for the past 4 to 5 years, and the undercurrent uncertainty of late have not aided the situation. It may be a matter of “who blinks first” as buyers and sellers both wait out this iffy period. More flat owners are instead beginning to sublet their flats after meeting the MOP. The next big move which might shake things up would be possible changes to the property cooling measures.

Price drop in City fringe and Suburban properties

The global economic slowdown may have affected industries all around, as salaried employees whose jobs may even be in danger are now more prudent with their spendings. As these are the main target audience for suburban and city-fringe properties, these market sectors are a little worse for wear and both sales and rental prices have fallen.

A typical 3-bedder outside the central region may have fetch $3,800 in monthly rent a year ago, but now the going prices are hovering around $3,200. Competition in the resale market may also rise this year as investors who have purchase properties in 2011 will now be clear of stamp duties and may be putting their units into the market by the middle of this year.

Corals @ Keppel BayPhoto: Corals @ Keppel Bay

Luxury homes and central region properties may fare a little better, though resale private apartment prices have dropped 0.3 per cent in February this year. Most of the buyers of these high-end properties are high-net-worth individuals or funds who are capable of holding on to their properties through market troughs. Foreigners also make up a large proportion of the buyers here, with Malaysians, Indonesians and Chinese forming majority of the group. As Singapore’s luxury properties are still considered value-buys in comparison with the other popular Asian city, Hong Kong, where prices are 30 per cent higher and most properties are leasehold, those with the cash will continue to pick up deals, more of which are to be had this year as developers begin to offload their unsold stock.

Tenants calling the shots

Tenants are now calling the shots in the private apartment rental market. From lower rental prices and shorter leases to property renovations, some are even demanding specific furniture, new utensils and linen.

SeaHorizonEC

Photo: Sea Horizon executive condominium in Pasir Ris

Property rental prices have been coming down, especially as property prices have fallen over the last few years, and supply have increased substantially. Landlords are now finding it harder to find tenants willing to sign the standard 2-year leases which were commonplace in the past. Now most tenants are asking for shorter leases of 6 months as they know they are able to secure another place at a cheaper price should they wish to do so after the lease period. Private property rents have fallen 4.6 per cent in 2015, with rents in the outside central region (OCR) feeling the heat more with a 5.6 per cent fall. Rental prices of city fringe properties fell 4.9 per cent.

Property experts are expecting a 9 to 10 per cent vacancy rate this year, with rental prices falling 8 per cent. There will be approximately 26,467 new private property and executive condominium units made available this year, pushing supply up to an record high. Coupled with the authorities clamping down on immigration and a weak global economy, the prospects may seem a little dim. With investors and landlords not able to secure rental yields, the market may see an influx of units being sold; mortgage auctions may also find themselves having quite a few more units at hand.

Lull in private home prices

Despite a projected lull in local private home prices this year, interest in Singapore’s property market remains steady as prime residential property prices are still 165 per cent and 92 per cent lower than those in Hong Kong and London respectively.

 Photo credit: Singapore Tourism Board

So despite property analysts predicting a 5 to 10 per cent fall in prime and mass market private property prices this year, the local property market’s core remains strong. 2010’s property cooling measures may have kept property prices 17 per cent lower than what it could have been. Private home prices have fallen 4 per cent last year, following a 3.7 per cent fall in 2014. In the luxury home market, prices have fallen 20 per cent since the Additional Buyers’ Stamp Duty (ABSD) was implemented in 2011.

China’s recent growth slump, plunging oil prices, the Federal Reserve interest rate hike and a general sense of a global recession looming, might consequently affect the property markets around the world. Businesses may reconsider their expansion plans, which could mean a fall in demand for office spaces and commercial properties. This in turn may affect the number of expatriates entering the country, which may also affect rental prices.

This year could prove tough for investors and property sellers, but not without glimpses of hope. 2016 may be the year to hang-in-there, but industry experts are expecting 2017 to take a turn for the better.