Property cooling measures to stay put

National Development Ministry Lawrence Wong has recently mentioned that the curbs placed on the property industry are here to stay as demand for property not declined.

HillsTwoOneThough property prices may have fallen, the dip has been gradual and slow. Coupled with the fertile bedrock of low interest rate and affordable quantum pricing of residential properties, the authorities may be afraid of a sudden and unmanageable spike in demand from investors should the curbs be lifted anytime soon.

And their fears may not be entirely unfounded as the market has been showing budding signs of recovery in the past couple of months. Demand, in particular for smaller units in well-located properties, from local and foreign investors alike, have been on the rise while prices are beginning to hold steady. Pent-up demand from previous quarters of muted activity have meant a rise in sales volume.

SignatureECYishunBigger Central Provident Fund housing grants will be included in the upcoming Budget talks, which may sustain resale HDB flat volume as more buyers qualify for subsidies. Resale volume for the public housing sector has already risen 7.8 per cent last year. As demand for resale flat increases, so will pricing and sales volume. A stabilising resale flat market could also mean an increase in the number of HDB upgraders who are buying off the private property market, in turn boosting sales in the private housing sector as well.

Executive Condominiums – Now’s the time

If you are a second-time HDB property buyer, and are looking at upgrading from a HDB flat to an executive condominium (EC) – the time may be now. Before the resale levy really kicks in.

The TerraceImplemented in Dec 2013, the levy applies to ECs launched after Dec 9 the same year and as most of the EC launches from now on will be for units launched after Dec 2013, a levy of $15,000 to $50,000 will apply. And that’s no small sum to scoff at.

Executive condominiums have long been the way to move from public to private housing for most middle-class Singaporean families. As young couples now see this as one of the best ways to start their families, competition for the same properties have never been fiercer. As a hybrid between public and private housing, ECs will become private properties following a ten-year period. There is a income ceiling for applicants however, of a combined household income of $12,000.

As bids for EC land plots dip, mostly due to a saturation of launches in the last few months, prices and sales volume may not hold as well moving forward. Currently, ECs which just escape this resale levy include Bellewoods, Bellewaters, The Terrace, Lake Life and The Amore. They each boast their own unique selling point, with unblocked views at The Terrace, basement carparks at The Amore, nature-inspired landscapes at Bellewoods and resort-living lifestyle atmosphere at Bellewaters. Combined with options of units such as penthouses and condominium facilities, it’s the only logical step up for HDB upgraders.

The rise of the Private Homes

Prices, that is. Private home prices look like they are on the way up. As suburban land prices steadily head upwards, a total of 22 per cent in 2012 alone, prices of new private properties may follow suit. 20, 879 private units were sold in January to November last year, boosted mainly by the regular supply of residential sites from the Government Land Sales (GLS) programme.

Cashew Crescent Terraces

And in 2013, as long as the supply of land sites continue, demand may be sustained at a respectable level. While the new private homes market is expected to do relatively well this year, they may stay just under last year’s numbers. The Government is keeping a close watch on the shoebox apartments sector and has implemented a cap on the number of non-landed private homes outside of the Central area. Property developers may find a drop in buyers due to subsiding rental demand.

However, landed property seem to top of the leader board with a 9.7 per cent increase, the largest rise in the private property sector. Is this because investors are expecting further rise in prices this year or at least within the next two years? Resale condominiums have also reflected a 3.4 per cent increase, though at a much slower pace compared to 2011’s 8.4 per cent.

Studio MarneForeign interest in the luxury segment is increasing, as more Chinese flock back to the market, especially as China’s economy improves. Reports reflect a hike in the numbers of Chinese buyers of properties above the $5 million mark.

If Singapore’s real estate market continues to walk the current path, it certainly puts big beams on property investors and sellers’ faces. In terms of the overall property and housing market however, uncertainty is masked. Are we heading towards the point of no return? Or is this merely healthy growth?

The property rent vent

Landlords are finding themselves at the mercy of tenants, some having to slash prices to find one. The diminishing pool of high-flying tenants is the main cause. More so for owners of prime district high-end luxury condominiums though. The expatriate working force have smarten up and many are now opting for mass market homes further away from the city centre and at lower prices. And especially with the sudden boom of new condominiums all around the island, things do not seem to be getting any easier for these city centre private condominiums.

According to URA’s data, private housing rents were up 17.9 pre cent in 2010 but only a paltry 3.8 per cent last year. And for this year, experts are expecting it to maintain last year’s increase at best. The only sprout seems to be Geylang, which has come up as one of the more popular areas for rentals of cheap shoebox units. The link to the changes in the immigration policies here as well as the exit of some major multi-national companies, is stronger than we think.

With the government reining in home mortgage spending and possibly rolling other cooling measures one can only guess at, careful consideration and calculation may prevent you from getting into a property investment situation you are unable to get out of. So if you’re thinking of investing in a private home in the current situation, do note that tenants now favour mass market suburban homes. Will this eventually affect private home prices, and then resale HDB flat prices?

Investors flocking to housing clusters

Those in the city fringes and eastern suburbs that is. And it’s no surprise either. These areas have been growing in popularity these past months and the numbers have shown. $1,500 psf used to be considered the pricing for expensive city-centre housing but now, it’s considered the norm even for suburban housing in the east, namely Marine Parade and Bedok. Other areas which registered a high percentage of transactions which crossed this $1,500 psf mark were Geylang and Bukit Timah.

The Sound private condominium in Bedok.

Property developers are lauding the ‘lifestyle’ concept of new private residential developments in a bid to attract the affluent. Many of the recent new property launches are also clustered in the east due the release of land through the government land sales programme. The Seawind and The Sound condominium projects had a median selling price of $1, 520 psf and $1, 650 psf respectively. There are, however, quite a number of new properties coming up in newer residential areas such as Punggol, Kovan and Sengkang and with competition heating up, gain in home prices in the East might slow in the months to come. Hillview might be another hotspot  for investors to keep a keen eye on, especially with the new Downtown Line 2 bringing property hotspots closer and closer together.

In the city fringes, the chart-topping districts were Kallang/Whampoa, Bukit Merah, Bishan and Bukit  Batok. And with commercial hubs being completed quickly in Buona Vista and Jurong Gateway, housing in these estates are expected to rise in due time. Are investments opportunities the only reason buyers look at when purchasing a home? Are there possibly other reasons and how can property developers better harness the momentum from this other home-buying group?

The Promised Land

At least this may be how landed properties are viewed in Singapore.

Thomson HouseMost buyers and investors would see owning their own land and building their own home a dream come true. Thus it is no wonder landed properties around Singapore are commanding rising prices. Suburban landed homes have recently seen a rise in prices and sales.

The districts which saw the most fervent activity were District 20, 16 and 23. Strangely, district 11 (Novena, Watten Estate) saw a dip in prices this past year. Ang Mo Kio saw a rise of 23.2 per cent in average psf price in 2012, topping the charts with an average psf of $1, 266. Notably, the Serangoon landed homes are selling exceedingly well, with the higest number of sales in the third quarter, with a rise of 33 per cent of sales in a quarter-on-quarter comparison. At these prices, could this be a sign that property investors are becoming more savvy and cost-conscious, and shunning more expensive city-centre homes for suburban properties in the city-fringe?

Industry insiders are predicting that the additional buyer’s stamp duty (ABSD) could have turned investors away from homes in central prime districts. In the long term, they also expect demand for landed housing to remain positive and prices to continue to trend upwards.

Property market has room for 100,000 more new units?

Soon, 100, 000 new residential units, both private and public housing, will enter the property market here. Is the real estate industry ready for this and are home buyers just waiting to snap up these new properties?

The highest ever number of recorded new home units since 2001, there are 83,975 private home units, 9, 824 executive condo units and 10, 070 units from the Government Land Sales programme. According to URA, most of the units will be completed by 2015 and 2016. Not forgetting that 2019 will be when the Thomson Line is up and running, properties along this new line may yet see another wave of interest when that time comes.

eCoIn addition, HDB will be launching 6, 400 new BTO flats in Bedok, Choa Chu Kang, Queenstown, Sengkang and Toa Payoh in November, bringing the total number of new flats in 2012 to the promised 27, 000. More HDB upgraders have been reported to be holding on to their resale flats and buying private properties on the side, leasing out the former to earn rents until the time when the selling price is right.

Do you belong in the group who have been waiting for a relief in property prices or are you joining the other camp who are hoping their invested property will continue to bring in the rental yields?