Resale property prices slide further

The private property market seems to be going the way property analysts have predicted in the beginning of the year. Over the last 6 months, prices of completed private property have fallen 1.9%. The steepest fall was in the beginning of 2014, at 3.7%. Though the decline has continued, the fall has been lighter in the quarters following.

Maysprings condoSince the implementation of the Total Debt Servicing Ratio (TDSR) in June of 2013, property prices have fallen at varying speeds over the past 2 years. A total of 42,606 new homes are expected to be ready for occupation within these couple of years and up to 96 per cent of the land sold this year are expected for future non-landed homes. It may become a tussle for prices and buyers, between new and resale properties.

As rental demand also continues to dip, prospects for the property market seems to have dimmed slightly, though select properties will still hold potential. Property experts have explained that the dip in prices in the resale market may have been due to the ability of individual to be flexible with prices. New properties which are being sold by developers have the means to stick to their guns in terms of pricing. The scale for rental supply and demand is likely to continue leaning towards the former.

Resale private homes – Slow climb up

There was a glimmer of light in the resale property market last month as prices of homes in the city fringe rose 1.1 per cent and 0.5 per cent in the suburbs. Overall private resale home prices rose 0.4 per cent.

BlueHorizonThough property analysts are not certain if prices will maintain their current level or dip even further in the later part of the year, the numbers gave at least a little hope to private property owners and sellers. While the resale market shows that it has steadied itself with a $0 T-O-X (the median transaction over X-value or a home’s market value), in the city centre district 9 which consists of Orchard Road and River Valley, more resale properties were being sold below the computer-generated  home prices dipped to an average of $55,000 below the X-value.

In district 5 of Pasir Panjang and Clementi however, the highest media T-O-X came up to $30,000; and in the Bukit Timah, Holland Road and Tanglin areas of prime district 10, the number came up to $14,000.

As the number of new properties being launched or completed rise, the prices of resale properties may face the danger of being pushed down by competition. Though location and condition of resale units may always have an upper hand. With the General Elections planned for the year ahead, prices may fluctuate with policy or economic changes. Could this year be the watershed year for the property market?

The many pluses of a Brownstone

Say Brownstone and most would think of the infamous (and also notoriously expensive) townhouses in America built in the 1800s.

But here in Singapore, a similarly named The Brownstone is a executive condominium (EC) in Canberra Drive. Response however was just as keen as it would have been if it were a brownstone townhouse in New York. Part of the attraction came from its proximity to the upcoming Canberra MRT station. Both the EC and the MRT station are planned for a 2019 completion date. The Brownstone will also feature a unique brown, sandstone-textured facade and jetty-like balconies.

The Brownstone ECThe 638-unit EC received 300 applications over the weekend of its launch and considering how the competition in the EC market has heated up since there are quite a few currently available for application in the market. Prices are expected to start at $599,000 for a 732 sq ft two-bedder to $1.3 million for a 1,711 sq ft penthouse. Other ECs launched recently include Westwood Residences on Westwood Avenue and The Vales at Anchorvale Crescent.

Buyers are often partial to executive condominiums as they are a hybrid between public and private housing, which means government grants can be applied to the initial purchases of these units, and after 10 years, they will become private properties. More often than not, their values would have appreciated by a considerable amount by then.

Singapore home prices down last quarter

Across the board, property prices have dipped again last quarter, but resale HDB flat prices may be stabilising. Following the first quarter decline of 1 per cent, resale HDB flat prices dipped only 0.4 per cent last quarter, possibly signifying a bottoming out of this market.

Optima condominium at Tanah Merah.

Optima condominium at Tanah Merah.

Nudged by the lowered mortgage servicing ratio cap from 35 to 30 per cent and reduction in the number of new BTO (build-to-order) and SBF (sale of balance flats) units, HDB resale flat prices have fallen for a few quarters now. Property analysts are expecting a stabilising of the market, or at least a rise in demand for resale units as HDB plans to increase the income ceiling for BTO flats, which may replenish the pool of potential resale HDB flat buyers.

Private home prices are however expected to fall further this year, especially as resale HDB flat prices have fallen so quickly the gap between private suburban homes and the former have widened. Some HDB upgraders may think twice about selling their HDB flat to purchase a private condominium unit and others may turn to resale flats instead of private homes. The expectation of a rush of new private apartment units to hit the market in the later half of this year may have also put a damper on market prices.

In the first quarter, private home prices fell 1 per cent, and the fall remained steady in the second quarter at 0.9 per cent. Moving ahead, prices of private non-landed homes are expected to fall 4 to 6 per cent by the end of the year.

 

Private property prospects for the next 2 years?

The Singapore General Election may be coming up in the next year and a half, and that leaves most wondering about possible policy shifts and how that would affect the country’s economy. Since the last election, immigration and loan policies have changed rather substantially, both of which have impacted the property industry in a number of ways.

Melrose VilleOn the financial front, the TDSR (total debt servicing ratio) framework has been effective in slowing down property demand. With the likelihood of interest rates here rising in tandem with US rates, it seems unlikely that this policy will be removed or relaxed anytime soon as it aims to help households and borrowers build a clearer structure around their long-term financial stability.

A decrease in immigration numbers have also affected the property rental industry, with vacancy rates possibly hitting 10 per cent at the end of 2015. Coupled with a growing number of completed new units made available within these 2 years, the supply could majorly outweigh the demand. Property experts suggest that the only way to slow down the property prices and demand decline is to reduce the speed and quantity of new properties, and an adjustment of the TDSR. There is no sign of change for the moment, but would next year bring about a fresh wave of changes?

Smaller private homes popular with HDB Upgraders

Whether for occupation or investment, HDB dwellers moving into the private property market are setting their sights on smaller units below 100 sqm priced between $750,000 and $1.05 million. Median sizes of purchased non-landed homes have fallen to 85 sq m.

This could be a good indicator for developers and resale private condominium sellers of the pricing sweet spot in upcoming launches. Prices of completed transactions of non-landed homes have fallen 5.4 per cent. But private property owners who are purchasing within the market are snapping up bigger units of up to 110 sq m. This could be due to the fall in prices since 2013 and the affordable total quantum pricing.

Pollen&BleuThe number of foreign property buyers have also decreased slightly, with most now targeting luxury homes tagged above $5 million. In addition to Singapore’s political and economic stability, established infrastructure and education standards, value-for-money property options continue to draw foreign investors despite increased stamp duties.

As the market acclimatises itself to the new dynamics of the Total Debt Servicing Ratio (TDSR) framework, increased stamp duties and other property cooling measures, the buyers may gradually re-enter the market. With the promise of new launches coming up in then next few months, the numbers could see a turnaround soon.

Fewer new private property launches

Despite lower sales of new private home last month, the percentage of sales based on the number of units launched, was positive.

The lower sales figure was mainly due to the lack of new property launches. But the take-up rate of the 499 units launched was at a happy 128 per cent in May. The take-up rate was only 84 per cent in May this year, compared to 82 per cent in April 2014. Considering the 21 per cent fall in sales in the first 5 months of this year, the leap last month is a promising sign.

HighparkResidencesLeading the sales were suburban launches at Botanique at Bartley, Northpark Residences in Yishun and The Panorama in Ang Mo Kio. Median selling prices were $1,232 psf at The Panorama, $1,292 psf at Botanique at Bartley and $1,397 psf at Northpark Residences. Competitive pricing may have lowered prices on some newer launches and this could have attracted buyers back into the market. There were even reports of private funds or group of investors who have picked up 16 units at 111 Emerald Hill.

In the months ahead, the number of new property launches will remain low, which may in turn affect figures. But instead of looking at across-the-board figures, sussing out potential deals in previous launches which are re-launchning new units could be the way to get ahead of the pack. Upcoming launches to look forward to are Gramercy Park in Grange Road and High Park Residences in Fernvale.

Rebound in resale private non-landed property market?

If sales volume are anything to go by, signs of the resale private property market rebounding could be imminent.

Since the fall of prices of resale units to equivalent of or lower than new private non-landed properties, the number of transactions have increased significantly. Within the first 4 months of 2015, transaction volume has seen a 20.7 per cent increase. Resale properties are often ready for immediate occupancy and rental, thus buyers tend to favour these units to new ones in order to skip the wait of building and construction. The rental opportunities to be had within the few years it takes to build a new residential property could be quite substantial. And oftentimes, resale units tend to have a bigger floor area.

PebbleBayCondoThough the number of transactions, 1,411 from January to April this year, is still lower than the 2,203 in a year-on-year comparison with the peak in 2013, property analysts are upbeat about the market as the year moves on. It could show that buyers are finally getting used to the cooling measures, in particular the TDSR (total debt servicing ratio) framework, and realising that the market could be reaching a plateau. Sentiments could be that this is the time to buy, before prices and interest rates start climbing again.

The promising signs could be seen across the island, though more markedly in Districts 5, 10, 15 and 23. Some of it could be due to the fall in prices over the past year, and some the potential of having the future Downtown MRT line in close proximity. Even the Central region’s luxury properties have seen a recent boost in sales numbers of 24.2 per cent, most evident in Districts 9 and 10.