Are foreign buyers shying away from Singapore properties?

Foreign buyers seem to be holding back from buying homes here in Singapore. The largest fall were from Indonesian buyers, from 112 down to 39 units in the last quarter. Chinese, Malaysian and Indian buyers make up the rest of the buying clout, though there has also been a decline in all segments.

Private home prices have fallen 1.3 per cent in all regions – 1.3 per cent in the central regions, 1.5 per cent in the city fringes and 1.6 per cent in the suburbs. An accumulation of various factors could have impacted the market:

White Sand HKPhoto credit:

Singapore is often compared with Hong Kong, for its size, population and infrastructure. Why then are property prices in Hong Kong skyrocketing while Singapore properties fight to garner foreign buying interest? One of the main factors could be the proximity of the country to China. Mainland Chinese buyers make up the bulk of the foreign buying pool here and Hong Kong is inevitably closer. Should they wish to travel far out, they often look at countries such as Australia, New Zealand or even the United Kingdom and United States. The yuan has also weakened and with the Chinese economy slowing down, Chinese buyers may also be more selective about their choices.

The Indonesian property market is flourishing and in fact, more buyers, even Singaporeans have been buying into the market. Jakarta and Bali are a few of the cities where buyers’ interest have peaked.

How then can Singapore continue to attract foreign buyers and will mere policy changes affect a change?

Luxury apartment market remains quiet

While luxury property buyers find similar properties in Singapore cheaper and more affordable than those in Hong Kong, the market for high-end apartments above 2,000 sq ft remains quiet. In the third quarter of 2014, 162 luxury condominium units were sold and this year, only 112. Most of the properties sold were in the prime districts of 9 to 11.

Palms Sixth Avenue 1Property analysts say the Additional Buyer’s Stamp Duty (ABSD) is one of the main factors affecting the change as it increases the total quantum price considerably. And as most luxury property owners are the highly affluent with sufficient holding power, they are unlikely to succumb to asking prices which are not suited to their liking. Buyers however are now looking for better deals as they see the property market as weakening. The buyer-seller tussle may continue while everyone keeps an eye on interest rates and global economic changes.

However, the landed home market in the prime districts are still doing well. 30 houses have been sold in the third quarter thus far, with the total sales numbers coming up to $266.3 million. And Malaysian and Indian buyers still have the strongest showing in the local market. Some of the projects which did well in 2015 include Leedon Residence, D’Leedon and Palms @ Sixth Avenue. Resale properties which fared similarly include Goodwood Residences, Urban Resort Condominium and St Regis Residences. Recently, a townhouse at Bishopgate Residence also sold at $21 million and Chinese buyers are coming back into the fold.


More launches ahead in the North-West

August proved to be a slow month for the private property market as the lack of new launches and the Hungry Ghost month made a tiny bump numbers-wise.

The number of homes sold were similar in a year-on-year comparison with 2014, and while it is comforting to know that the numbers are level, the overall primary sales figure of 7,400 units sold last year is below the ideal 10,000 to 12,000 units per year primary sales volume. The resale private property market is largely dependent on the primary sales market thus home sellers as well as developers are all hoping for more vibrant sales of new properties.

PrincipalGardenThe last quarter of the year may be more promising as there are a number of new launches coming up. This includes Principal Garden in Prince Charles Cresent, and a slew of executive condominiums (ECs) in the North and North-west, namely: Signature @ Yishun , Wandervale in Choa Chu Kang, The Criterion in Yishun and Parc Life in Sembawang.

The most recent EC launch was Sol Acres in Choa Chu Kang. So far, 259  units have been sold at approximately $787 psf. Despite the recently-announced increase in income ceiling for EC applicants from $12,000 to $14,000, the uptake for EC units seemed to have stalled somewhat, with an increasing number of units unsold.

Property analysts are chalking this up to a lull month, the location of the properties, tightening loan limits and the developers’ track records. But will the upcoming EC launches fare better?

Competition heats up in suburban rental market

As the number of new condominiums reaching completion in the suburbs increase, more owners and landlords are feeling the heat of the competition, especially if many units within the same establishment are in the market for tenants.

Tenants are becoming more savvy and picky with their rental choices, and are more aware of the choices and rental prices available. Though rents are not dipping anytime yet, competition may eventually push it downwards. Older resale condominium developments may also feel the squeeze more as proximity no longer plays a part in differentiating rental prices. When placed near each other, newer private apartment units will command higher prices in comparison, as their facilities are newer and may need lesser maintenance.

WaterfallGardensThe size of the property will then come into play. Smaller suburban developments without amenities at the scale at which larger establishments offer may lose out slightly. At D’Leedon for example, rental prices were at a monthly median of $4, 288 whereas at the nearby older Waterfall Gardens, median prices were at $8,600 per month. That could however be due to the larger apartment sizes of units at Waterfall Gardens, which does not have smaller studio or one-bedders.

With diminishing expatriate housing budgets, landlords may be looking at tenants with the spending power of $3,000 to $6,000 per month. But as centrally-located apartments have rental price tags closer to $10,000 per month, suburban units may still garner some attention. It may merely be a matter of how thinly spread out the tenant pool will be.

Private property market – The road ahead

The outlook for private properties seems a little vague for the moment. Though the market seems to be enjoying a respite, with prices maintaining its current level, and prices have risen slightly over the past two months, property experts are expecting an overall fall of 3 to 4 per cent in the Singapore Residential Price Index (SRPI) this year.

Buyers looking out for good deals are picking up units across both the central and non-central regions. Recent increases in the SRPI could be due to the rise in number of transactions especially in the central regions with 0.6 and 0.2 per cent increases in June and July respectively.

WoodhavenThe rental market, however, has remained weak, especially in the suburbs. And as rents begin to fall in the central regions, many tenants are making quick comparisons and opting to move into more centrally-located properties instead. For example, a private 2-bedroom condominium unit in Woodlands is being rented out for $2,000 a month, which is comparative to leasing a 3-room HDB flat.

But for buyers and investors who are considering purchasing private properties, investing in bigger resale or new properties may be preferable as smaller units will be facing fiercer rental competition once many of these units reach completion next year.

Higher future demand for ECs?

Recent news of the income ceiling for new HDB and ECs (executive condominiums) flats possibly being raised have brought about a wave of questions from the market. Will this increase competition for new BTO flats? How will the resale HDB flat market be affected? Will the private property sector see lower or higher demand?

Since ECs and mass market private homes often go after the same pool of buyers, raising the income ceiling for ECs may mean increasing competition for the latter. With the higher income ceiling of $14,000, buyers who were previously ineligible for executive condominiums may now find themselves able to purchase these unique public-private hybrid properties, drawing them away from the private property market.

Sol AcresECs are considered public housing and buyers are able to take advantage of available housing grants for this property type. After 10 years, they become private property, which considerably ramps up their sale value. Buyers who have previously had to turn to private properties at much higher prices, and who are now eligible to apply for ECs will no doubt be in glee. The difference between an EC and a private property is about $300 psf and buyers comparing private homes and ECs in the same vicinity may come up with savings of up to $250,000. Not an amount to be scoffed at.

One recent EC offering, Sol Acres, have since sold 294 units. Upcoming EC launches are expected to give pricier private mass market homes without the calling cards of a good location, a run for their money. Prices of ECs usually stand at around $800 psf whereas private homes go from $1,000 psf and up.


Property – To buy or not to buy now?

Since the implementation of property cooling measures by the government agencies, property prices have fallen at a gradual pace and seem to have currently reached a plateau. Some may have been waiting for an opportunity to hop into the property buy-sell train, but others may be concerned about whether they should sell now or later.

How do you decide if the time is now or later?

The WaterlineThere are a few fundamental questions to ask yourself:

  • Need or want?

Of course, owning a home of your dreams is the ultimate desire for most. And so it is a want. But you will need to evaluate your situation very honestly – do you absolutely need a new place? Or could it wait? Are you hoping to merely flip a property for profit, or have the ability to hold out for the best deal? If you answer is “Need”, then you have to a few other considerations to take care of.

  • What’s in the piggy bank?

Do you have enough left in your savings and monthly earnings, after setting aside sufficient funds for your monthly bills, every day expenses and insurance to manage the risk of buying a home? Besides having enough to make your monthly mortgage, most people may not realise the need to have an amount within your savings for very real and unforeseen situations such as periods of unemployment or health issues.

  • Are there advantages or pros? 

Is the price on the property you are hoping to buy right? If there is room for negotiation, which is why an experienced real estate agent is a boon, and the mortgage calculator helps you compare rates and tells you that the interest rates are prime, then perhaps the time truly is now.

Singapore – An Island city and her Sea view homes

With Singapore being a island city, it is no wonder properties with a sea view, or better still, just next to the sea, are a popular choice. Some of the more common spots for these seafront properties include Pasir Ris, East Coast, Keppel Bay, Sentosa and though not as common – Sembawang.

Bunglows By the Sea Wak HassanPhoto Credit: Fragrance Group

Not as well known as the other districts, Sembawang is a well-kept secret on the Northern end of the island. The Sembawang park area overlooks quiet stretches of the sea and the Johor Straits. Perhaps its distance from the city centre has deterred some buyers from calling this area home. But those who have since bought properties in district 27 have many good things to say about it.

It is quiet, hence provides a sense of exclusivity, where the view seems like it is almost all yours. Landed homes in the Bungalows By The Sea in Wak Hassan Drive have yet to be fully sold despite landed property prices having fallen in recent times. Prices of a bungalow here is at around $610 psf for the built-up area. But land sizes are big, thus the price of a bungalow here could come up to $6 million. The other landed properties in the vicinity include The Shoreline Residences which have been fully sold.

Next up - The Nautical in Sembawang.

The Nautical in Sembawang.

Nearby, there are private non-landed properties for sale, including The Nautical and Skypark Residences which is an EC (executive condominium). Will Sembawang become the next seaside town to watch? Perhaps so, though it will take some time to fill it with amenities and residents. But the wait might very well be worth it.