Main factor for Australia’s property price-rise not foreign investment

The Canberra-based Australian Treasury has recently divulged the results of a study which showed that the main factor for rising property prices in Australia is not, contrary to popular belief, investment monies from foreign buyers but the strong foundation of household formation in the country.

sydneypropertyPerhaps it is a culture where citizens are keen to form new nuclear family units and to live in their own home which drives up demand for property, especially the main Aussie cities such as Sydney, Melbourne, Perth and Brisbane. The possible influx of foreign students in these cities could also mean locals are buying up properties to reap rental yields, thus pushing property prices upwards.

pacecollingwoodmelbourneSince 2008, property prices have risen more than 50 per cent, but only A$122 (S$129) of the A$12,800 increase in overall prices per quarter were attributed to foreign demand. That said, a total of A$24 billion in real estate investment monies from Chinese buyers have been approved in the year ending June 2015. This year, some states have begun to impose transaction taxes on foreign purchases of Australian properties and the study done by the treasury may have excluded properties purchased by locals for their overseas family members and relatives.

Will demand, local or foreign, wane and if so, how soon? Will prices slide gradually or continue to remain stagnant at its current levels?

 

Indian cities top in list of Asia’s property investment hotspots

India may not have previously come up as a potential goldmine for property investors, but real estate in some Indian cities have been creeping up the popularity charts and can now be viewed as some of Asia’s most prime investment real estate.

mumbaipropertyJust like in China, a huge country like India will no doubt have some cities which shine over the others. Mumbai and Bangalore have come up tops in a comparative table of 22 Asian markets. With many multi-national companies setting up regional headquarters or back offices in India, it comes as no surprise that commercial properties are key when it comes to real estate investment in India. The migration of locals from smaller cities and townships into these main cities and business hubs also mean a demand for rental properties are on the rise.

Singapore has fallen from its 11th place to 21st as residential property prices declined for 12 consecutive quarters. Even Tokyo, which topped the list at first place this year, have fallen to 12th place for next year as low interest rates see sellers holding on to their properties despite low vacancy rates. Japan’s declining economy also has a part to play in the market sentiments there.

newyorkapartmentThe mainland Chinese investors are some of the largest players in real estate markets across the globe, but they have begun to turn their attention away from Asia to markets further north such as London and New York. Property prices in China are soaring, and their yearning for foreign footholds and connections have brought them into both established markets in the West and emerging ones in the region.

October’s new home sales up 128 per cent this year

With more that 1,252 new private homes sold in October, new home sales have risen 145 per cent from the 509 units sold in September and 128 per cent in a year-on-year comparison with 2015 when 549 units were sold.

thealpsresidences4The sudden spike may have been due to pent up demand after the slower months of the June school holidays and Hungry Ghost month in August, plus the launch of major projects in the later part of Q3. The 2 new property launches which garnered most of the sales were The Alps Residences in Tampines and Forest Woods in Serangoon Central. Each sold more than 300 units which made up 55.7 per cent of October’s sales. Other projects which consumers actively seemed out such as Stars of Kovan, The Trilinq and Kingsford Waterbay all sold only 30 units each, though understandably as these are much older launches.

Property analysts put the sudden rise in sales, a 15-month record high in fact, to the affordable prices put out by developers. Despite the slower economic outlook, consumers know a good deal when they see one and are willing to invest in what they consider to be long-term investment-worthy properties. Forest Woods is situated close to the Serangoon transport hub – the MRT station, bus interchange and NEX shopping mall – which could account for its popularity.

forestwoodsForest Woods was the top seller last month, with 364 units going at an average of $1,078 psf. Smaller units were purportedly gaining traction with buyers once more. Shoebox apartments, though aplenty in the market, remain affordable and property analysts report a direction change from investors who have turned their attention from riskier financial products back to the more stable property market.

 

October’s private home sales set to rise

After a quarter of being in the doldrums, the mood in the property sector may lift a little next month as private home sales are expected to rise, mainly due to the increase in number of new property launches this last quarter of the year.

queenspeakcondoSome of the major launches which have already started things off on the right note include Forest Woods in Serangoon and Queens Peak in Queenstown. Both properties are situated near MRT stations and will no doubt be popular with buyers and investors who often look at the location and potential sales and rental yields. The Alps Residences in Tampines which launched last month has been enjoying the attention from buyers and have been selling well.

Property analysts are in fact expecting Q4’s property figures to exceed that of 2015. The total number of private homes sold last year stood at 7,440 units; and this year’s predictive numbers are between 7,500 and 8,000. Some of the best-sellers in the private home segment include Lake Grande in Jurong, The Trilinq in Clementi, Kingsford Waterbay in Serangoon, The Glades in Bedok and Sophia Hills in the fringe of the city. For October alone, sales volume looks set to exceed the 1,100-units mark, the highest number of units sold in a month this year.

KingsfordWaterbayWhile interest rates remain low, buyers are more savvy about where they put their money, and are more likely to look at new, uncompleted units, especially with some developers offering incentive schemes that benefit the financial plans of buyers without cash liquidity, which do not yet require immediate rental yields to help tide them over the market lull.

Parc Riviera – One price fits all

Developers have been dishing out various incentive schemes to draw buyers into the new private home fold, and now an upcoming property launch will do the same. EL Development will be offering a flat-price within the same type of units between the second and fifteenth floor of their Parc Riveria condominium. And the offer only stands when the deal is sealed at their launch this Saturday.

parcriviera2Photo Credit: www.parcrivieracondo.sg

With this new incentive scheme, units on the more popular higher floors will likely be the first to fly off the shelves as they traditionally command higher prices for the view they promise. As a price guide, the 2-bedroom units are going for $725,000. Other units available in the project’s two 36-storey blocks include 463 sq ft one- and 1,711 sq ft four-bedders though more than half are made up of one- to two-bedroom apartment units.

parcriviera1Units in the floors above the 15th-storey will also be available for purchase, though prices will be higher. Traditionally, units in the higher floors are about 15% more expensive than those in the lower floors. EL Development came up with the first-in-market scheme as a way to provide buyers with a transparent pricing system and a way to draw attention to specific units. Some of their other properties currently in the market include Skysuites 17, Stevens Suites, La Fiesta and Trivelis. Parc Riviera has already received positive interest and with this creative new strategy in place, it looks like the Parc Riviera sales office might see a flurry of activity this weekend.

 

 

District 28 : Living in greenery

Before the townships of Punggol and Sengkang sprung up, Seletar and Yio Chu Kang laid pretty much quietly in a green and nature-filled area of the island.

floraviewPhoto credit: Oxley Holdings Limited

With the population in districts 19 and 28 increasing within the decade past, amenities and transport options have improved though the exclusive ambience remains mostly untouched. There is now the Seletar Mall, Greenwich V mixed-used development, and the upcoming development of the Seletar Aerospace Park in the vicinity.

Situated at the junction of Ang Mo Kio Street 66 and Yio Chu Kang Road is the Floraview and Flora Vista, a freehold 90-unit exclusive private residential project developed by Oxley Holdings Limited.  It also consists of 28 commercial units as a mixed-use development. Though exclusive often means remote or inaccessible, this project is a mere 15-minute drive away from the city centre via the Central Expressway and a smooth journey to Changi airport via the Seletar Expressway.

The Greenwich in Seletar

The Greenwich in Seletar

Popular with buyers, all of the one- and two-bedroom units at the Floraview and Flora Vista have sold out but the remaining 3-bedders and penthouses are available with prices starting at $896,000 for the 3-bedders. The 2-room penthouse units are highly affordable at $786,000 and $1.12 million for the 3-bedroom penthouses.

The district, being largely untouched and with mostly private residential units, has great growth potential. Other popular non-landed private properties in the district include The Greenwich, Seletar Park Residences and Seletar Springs.

 

Property market in the doldrums in Q3

The local property market seems to have taken a harder hit in the third quarter as both sales and rental figures fell. While the decline was not drastic or sudden, it nevertheless points to possibly tougher times ahead.

alexresidencesOverall property selling prices fell 1.5 per cent while rental prices dropped by 1.2 per cent. The general global economic gloom, fears of inflation and growing unemployment rates have given way to a sense of impending recession. Buyers are likely to be more careful with their finances and though property is a good way to hedge excess funds, investors are likely to weigh yield potential even more seriously should the negative sentiments persist.

The private residential market seems to be the most affected as vacancy rates rose. Property analysts report more positive sales in the resale rather than the new homes segment, possibly because there were fewer new residential project launches in Q3. Resale property sales clocked a 15.7 per cent increase while new homes sales fell by 12 per cent.

tampineshdbIn the resale HDB property market, prices continued to stabilise, with no significant rise nor fall. However, the number of transactions recorded fell by 5.5 per cent. Currently, overall private home prices have fallen 2.6 per cent.  With only 2 months left to the year, property experts expect a slight fall in prices and transactions in the private property market, which largely dependent on market sentiments may result in a final 3 to 4 per cent decrease for 2016.

New private homes with strong attributes still a draw

Amidst speculations of a bottoming-out real estate market, the 3 major project previews over the weekend might be good indicators of market fluctuations in the months ahead.

38-jervoisPhoto credit: Prominent Land

Judging from the strength of public response from recent launches, new private non-landed developments with strong attributes such as good locations, usually those near MRT stations and shopping malls, and affordable quantum prices will take market headlines for now. Buyers are not entirely shrinking away from making purchases, but they may be pickier as the choices available outweigh the current demand.

City Development’s (CDL) latest private residential offering of the Forest Woods condominium clocked an encouragingly positive level of sales in its recent launch, perhaps leading the way for the next few launches coming up – Queens Peak on Dundee Road in Queenstown, Parc Riviera in West Coast Vale and 38 Jervois in Jervois Road.

forestwoodsThe last of these projects is a rather exclusive boutique offering of 27 units developed by Prominent Land. At 38 Jervios, units range from 474 sq ft one-bedders to 1,098 sq ft two-bedders plus penthouse study with prices averaging $2,100 psf and up. Buyers can expect to fork out $1.08 million for a one-bedroom unit to $1,81 million for a 3-bedroom unit. 6 of the 27 units will be penthouses.

Although these new private homes may push sales figures past the 1,000 a month mark, property analysts do not yet expect a sudden market uptick as prospects of the economy remain lacklustre.