Varied market response to declining property prices

Home prices in both the private and resale HDB markets have continued to dip in the second quarter of 2014. In the first three months of the year, the decline was 1.6 per cent. Perhaps buoyed by the increased number of launched in Q2, the rate of decline was somewhat less steep at 1.3 per cent the quarter past.

Rezi 3 TwoBuyers who have been on the lookout for opportunities such as this may be happy to find that more than a few property developments have been offering discounts. Though the overall number of sales have picked up in the second quarter, mostly due to new launches, the private homes market saw a more obvious slowdown in both the city centre and suburbs. The drop was 1.5 per cent in the city centre and 1.1 per cent in the suburbs. Properties in the city fringe fared better with a 0.6 per cent drop, an improvement considering the 3.3 per cent dive in the earlier part of the year.

But there are those who are concerned about the longevity of their investment should they purchase now. The question they may ask is, is this the lowest prices can go? If I were to buy now, will the prices continue to drop? Though property analysts are doubtful that the prices will bottom out anytime soon, they are expecting the maximum of a 5 per cent decline.

As long as the supply continues at a steady pace, prices will not vary far from the current levels. Perhaps true change will only come with a shift in policies. Considering the elections will be here in a couple of years’ time, the time leading up to that might be a period of uncertainty.

Property launches may trickle

As transaction volume of luxury homes remains below par this year, property developers are holding back on their new launches. The last big launch was in October last year, of the freehold Goodwood Grand and Liv on Wilkie.  There are apparently up to 12 new projects on hold.

The one high-end residential project which went on sale this year was The Rise @ Oxley Residences near Orchard road. So far only 8 units of the 120-unit project has been sold, at a median price of $2,452 psf. Sales have been slow since November last year. Goodwood Grand has sold 22 of its 73 units as of May this year, at a $2,323 psf average. The availability of smaller apartments at Liv on Wilkie has helped with sales as they are more affordable for investors and may have longer legs to run.

The Rise @ OxleyWhat have developers been busy with these few months? Cutting back on their losses by offering discounts on existing stock, it seems. And as some may be in a hurry to sell as deadlines loom, the discounts are more attractive than usually expected of the property market.

But for those who are willing to wait, new projects yet-to-be launched include New Futura in Leonie Hill Road and Gramercy Park on Grange road. Once again the waiting game is being played. And though it was the buyer’s game earlier this year, the ball now remains in mid-air. In whose court will it land?

Bidadari – Property with longevity?

Where bustling and ever-so popular Bishan stands,used to be cemetery land. When it was first redeveloped in the early 80s, no one would have imagined the boom it enjoys today.

BidadariPhoto credit: HDB

Now it could be Bidadari’s turn. Already the new HDB flats to be built have garnered buyers’ interest and private landed residential properties in the area are also welcoming the attention. Surrounded by the quiet and exclusive atmosphere of Bartley, Mount Vernon, Sennett Estate and Upper Serangoon, Bidadari has been slated for development into a public housing precinct and a private property enclave.

Nearby Potong Pasir and Bendemeer have already seen their share of new properties coming up. HDB is planning 10,000 new homes in the area under the HDB Master Plan 2014, and up to 1,000 new private homes are expected to secure their place by end of 2015.

Nin residences at Bartley

Nin residences at Bartley

Considering the age and population density in the estate, there is a huge space for development, which could also mean potential for properties. So far, private condominium sales have been brisk. New developments in the area include Nin Residences, Bartley Residences, The Venue Residences, 8@Woodleigh. There are already some schools in close proximity, such as St. Andrew Junior College, Maris Stella High School and Stamford American International School. A new retail development, Market Square, is also on it’s way up.

Though demand for properties here may not seem to be as high as the neighbouring Bishan or Toa Payoh, one must not forget Bishan’s history. Their day will come, and perhaps it is just a matter of time.

HDB rental market stable

The rental demand for HDB flats has remained stable for most of the year. Though there was a slight rise in February and March, the take-up rate has sbeen sliding since August last year. But since April, demand has remained stable for the next three months.

Yishun HDB FlatRent prices for whole HDB flats now hover around $2, 300 per month. And since most tenants are fresh graduates or foreign students, they are likely to want to sublet to make rent. How then has the subletting quota affected tenants who wish to rent out part of their rented HDB flats? In January, rules were set to restrict the “formation of foreigner enclaves in HDB estates”. But figures have shown that hardly any HDB block has gone over the quota. With the exception of those nearer MRT stations and town centres. Tenants can search online for the quota of the specific HDB block they are interested in renting a unit in.

With more new flats being rolled up quarterly, what worries the industry more is the oversupply of flats for rent. Though prices of private properties are flat-lining, home loans are proving equally, if not more, difficult to secure. This means HDB upgraders may now re-think their plans to sell, instead, keeping their flats and renting out rooms to pick up profits which may go towards funding their targeted private property purchase.

As the year edges past the halfway mark, the balance between seller and buyer remains delicate. Which way will the scales tip?

Kovan Haven

Once upon a time, Kovan was a place no one really knew about. Now it’s a little of a wonderland, especially for young families and property investors seeking a good deal.

As an area considered to be exclusive with mostly landed homes and private properties, any new condominium would be greeted with eager arms from HDB upgraders in the surrounding estates such as Hougang and Serangoon. One of the latest offerings in Kovan is the Trilive condominium on Tampines road. With up to 80 per cent of its 222 units being dual-key apartments, it is expected to be exceedingly popular with large families or buyers looking to rent out part of their property while still occupying it, yet without sacrificing their privacy. Units are expected to sell at around $1, 350 to $1, 400 psf.

Trilive KovanAt the neighbouring The Tembusu, units have been selling at an average of $1, 541 psf. It’s wide range of property options, from one- to four-bedders as well as dual-key apartments and penthouses have enhanced their ability to draw in a varied buying crowd.

Other popular properties on the Kovan menu are Bliss@Kovan, Kovan Residences and Kovan Melody. The Heartland Mall and Upper Serangoon Shopping Centre are already in its midst, and the area is steadily adding amenities and facilities to their township, with an upcoming commercial hub in the nearby Serangoon Sub-Regional Centre. Apartments in this area could be looking at potential rental yields in the near future.

Resale HDB flats prices dip

The number of resale HDB flat buyers is diminishing. At its two-year low last month, the number of flats which exchanged hands in May was 1, 320. In April, 1, 484 resale flats were sold. Prices also fell 1.2 per cent in May, the lowest since April 2012 according to the Singapore Real Estate Exchange’s (SRX) price index.

Marsiling Greenview BTO HDB FlatThe most common reason for the drop was the loan curbs. This has prevented many buyers from securing a desired loan amount, thus unless they have a large enough cash reserve, it usually puts a resale flat out of sight. The number of transactions in March and April were more positive but that could be due to the pent out demand following the festive season in January and February. Other possible reasons for May’s drop could be the release of new BTO and SBF (sale of balance) flats by HDB in the same month. The latter SBF flats are usually more popular with location- and price-conscious buyers as they are cheaper than resale flats but yet are situated in mature estates.

But what about HDB upgraders who are have purchased private properties? Unlike private property owners who are not allowed to purchase HDB flats, HDB flat owners are allowed to purchase private properties. But as buyers play the waiting game, resale flat owners are now simply willing to wait, if they can, or rent out their HDB flats. This in turn keeps rental supply high, but that also means they will be likely to compete with private property rentals. As the supply of tenants are kept stable, this could also mean there will be a price-war in the rental market.

How long will the resale market remain weak? Will it be a tough uphill climb?

Resale private home prices down the slippery slope

The tussle between new and resale properties continue to play out as supply continues to outweigh demand and buyers are now pickier with the units they purchase.

There has been recent calls for relaxation of the cooling measures, particularly the Total Debt Ratio Servicing (TDSR) framework which limits the amount of loan buyers can receive, which is largely dependent on their income. Those with a flexible income or commission-based incomes are particularly hit as the main part of their income may not be considered towards their basic pay.

Buyers could also be holding out on new launches as prices have dipped since initial sales launches. CapitaLand’s Sky Habitat recently sold a median of $1, 377 psf last month. But when it was first launched 2 years ago, prices were at $1, 583 psf. There are still a considerable number of unsold units out there and some buyers could be looking out for developers looking to sell off remaining units, which also means resale properties may be struggling to get themselves noticed, unless their price is right.

Sky Habitat condominium in Bishan.

Sky Habitat condominium in Bishan.

And as rental demand also shows signs of weakening, investors are more wary of properties, particularly newer suburban mass-market homes, which are yet untested in the rental market. Some condominiums may have a higher number of units out on lease at the same time, which increases the competition for landlords.

Will this continued decline in resale home prices cause buyers to rethink their property investments? How can you better spot the potential of a property?

Landed home prices set to rise

The spotlight has been on new and resale private mass-market homes recently. But with that market reaching saturation, attention is now turned onto landed private homes. Everyone knows how rare these types of property are in land-scarce Singapore, but prices have been falling due to the consumers’ diminishing ability to purchase these expensive properties.

Loyang Rise HouseBut the decline may ease up by end of this year. Analysts are expecting prices of landed homes to pick up next year. This may mean more home owners will hold on to their properties in wait for better prices. This restriction of supply could also be the start of rising prices. In the long run, landed homes do generally hold up in terms of prices better than condominiums. The drop in landed homes prices was only 0.7 per cent, compared to the overall private home prices of 1.3 per cent.

Meanwhile, buyers looking for a worthy landed property to purchase could look at areas such as Bukit Batok, Loyang, Jurong or Sembawang. Terrace houses are usually more affordable than semi-detached or bungalows, and they are usually the first to rise in prices when the property market bounces back.

One possibly glitch is the rental prospects of landed homes. Compared to apartments, they are harder to find tenants for.