Resale HDB market looking at a year of stabilisation

Transaction volume and prices of resale HDB flats dipped once more last month, following a rise in November. Prices of resale HDB units fell 0.3 per cent in December and 13.9 per cent fewer transactions were recorded in midst of the usual year-end quiet. A total of 1,364 resale flats were sold last month.

bishanloftecLarger units such as the executive flats and 5-room flats saw a bigger price decline of 0.9 and 1 per cent respectively. Prices of rarer 3-room and 4-room units dipped only 0.1 and 0.2 per cent. The steeper decline for the bigger flats could be due to declining private property prices, which may steer some buyers towards that direction. Smaller HDB flats are priced much lower than the same in the private property sector, thus the pool of buyers for these units are considerably more stable though now that singles can apply for 2-room flats directly from HDB, the pool could have diminished slightly.

5-roomhdbPrices of resale HDB units in non-mature estates fell the hardest at 1.2 per cent year on year, possibly due to competition from the rising number of private residences in the suburbs. In mature estates on the other hand, prices have risen 1 per cent. Overall, with prices fluctuation within the 1 to 2 per cent range, analysts consider the market stabilised after years of gradual decline since 2013. The market could be reaching a zero per cent change soon and with the current market levels remaining unchanged, buyers are beginning to take the opportunity to snap up units in the resale market when a suitable deal comes up. Resale transactions may rise up to 15 per cent this year.

Continued decline of private resale condo prices expected

2017 has arrived and the question on every property owner, seeker and investor’s mind may be how the year will fare for them. Will interest rates rise and how will that affect their financial sustainability? Will vacancy rate fall and will there be an increase in resale units hence affecting price competitiveness?

casabellaThe last couple of months of 2016 has shown a continued decrease in resale condo prices. In November, overall resale condominium prices have fallen 0.7 per cent, following a 0.2 per cent in October from September. While central region private non-landed residential properties have regained some favour with foreign buyers, prices have dipped despite a rise in sales volume. Property analysts are expecting a market stagnation at best for 2017 as a quick rebound seems unlikely due to the continued slow economic growth and global political uncertainty.

The increase in sales volume is however a sign of hope for the property sector, as the rate of price decline may cease after a period of increased activity. Most sellers who are listing their units under the current market conditions are more likely than not serious sellers as most investors will try to hold on to their units and tide over the market lull. Thus buyers are increasingly aware of this change in tide and are negotiating for lower prices.

seletar-springsThe segment most affected could be the small suburban condominium apartments as the number of resale units are on the rise and also facing competition from HDB flats. While official figures are yet to be computed, analysts are expecting private property prices to have fallen by approximately 3.5 per cent last year.

2017 likely to remain quiet for property sector

matilda-sundeck-bto-flat2017 looks to be a pretty much run-of-the-mill year for the public housing scene, on the surface at least. It may be the year when the authorities make policy adjustments to keep the number of new BTO flats in line with demand from young families and to make them available sooner.

The National Development Minister, Mr Lawrence Wong, has indicated that one of his key goals by 2018 is to reduce the waiting period for a new flat to 2 to 3 years as opposed to the current norm of 3 to 4 years. This may help relieve some pressure from the resale flat market, though sellers may find it more difficult to then find buyers for their units unless they are well-located or are rarer unit-types such as 3-rooms flats or executive flats or maisonettes.

The next BTO launch will be in February with 4,100 flats being offered in Clementi, Punggol, Tampines and Woodlands. The Housing Board is looking at a total of 17,000 flats in their 2017 launches.

hdb-maisonetteThe private property market will need some transformation in order to keep up with competition from regional markets and changing buyer requirements. Some property players have already made changes by providing mobile apps for their agents as well as build a rating system so buyers can easily appoint an agent for their selling and buying needs, but perhaps more radical changes need to happen from the policymakers’ end in order to sustain a profitable real estate market while keeping the numbers realistic enough for true home seekers.

More deals in Q4 sealed in auction property segment

Sales of auctioned properties in the 4th quarter alone have accounted for more than half of the total sales for 2016, that is almost 5 times more than the $10.3 million in the same quarter in 2015. At $47.2 million, and possibly more when the numbers are tallied come end December, this sales figure already stands at 51 per cent of the entire year’s property auction segment sales.

Seascape at Sentosa Cove.

Seascape at Sentosa Cove.

Property analysts report that this is unusual for the year-end period which is usually a slower time for the property sector due to the festive season and school holidays. Most of the transactions hailed from big-ticket prime land plots as well as larger, highly-priced residential properties. 3 vacant land plots within the Swiss Club estate in Bukit Tinggi, Jalan Kampong and Kampong Chantek and another at Jalan Bahasa boosted sales in a big way. Developers have increasingly been on the lookout for land plots to replenish diminishing land banks and prime sites with development potential are always hot property.

Orchard Scotts2Other significantly-priced properties which were sold off at the auctions included a 3-bedder apartment in Orchard Scotts for $2.35 million and a 4-bedder duplex at Seascape @ Sentosa Cove for $6.35 million. Property analysts are expecting property auctions to continue attracting bidders next year as the economy is expected to remain sluggish and most buyers are getting used to the property cooling measures. More are now quicker to commit, and may be even more keen to close deals before the end of 2016 arrives.

Prime land plots released for H1 of 2017

Out of the 5 residential sites which were released under the Government Land Sales (GLS) scheme‘s confirmed list for H1 of 2017 are 3 sites which may see heated competition from bidders – one on Jiak Kim Street where the Zouk nightclub used to stand, another on Fourth Avenue right next to the Sixth Avenue MRT station and yet another on Woodleigh Lane, near the new Bidadari township and Woodleigh MRT station.

rmaisonThese 5 sites are expected to yield up to 2,330 new homes, about 50% more than the 1,560 units yielded by land released in the first half of this year. Bidding on the last few sites released this year have gotten developers and property analysts excited about the potential volume and size of land plots to be released next year, but the authorities have kept it conservative thus far, having released only 10 sites on the reserve list. This includes 1 mixed-use site and 2 commercial sites.

It is possible that the Government is concerned about the stock of unsold executive condominiums (EC) currently in the market. In addition, most of the units sold this year were purchased by investors and not true home-occupiers. The Monetary Authority of Singapore has also recently flagged their concern about rising vacancy rates in the private property market. This combination of factors may have influenced their decision on how much land supply to release in 2017. Only 1 EC site was released on the confirmed list and another on the reserved list.

HDB flat prices rise slightly in November

A 0.2% rise in resale HDB flat prices may bely the fall in sales volume in November due to a possible trickle-down effect from heightened activity in the new Build-to-order (BTO) flat segment.

bidadariNovember’s launch of BTO flats was the largest in the year, with flats in Kallang/Whampoa and Bidadari garnering the biggest response from applicants. With flats in these areas oversubscribed, some may have decided to skip the wait and go for resale flats instead. The overall buying sentiment in the HDB market may have also received a boost from the launch.

In a year-on-year comparison, prices are however 0.7 lower than that in November 2015 while resale volume is 7.1 per cent higher. The figures are not surprising since resale HDB flat prices have been stabilising over the past year while sales volume is largely dependent on demand and the option of new flats. Flats in mature estates continue to command high prices and in that, the property cooling measures may not have had that kept selling prices high and most sellers are not in a hurry to let go of their flats, until the time when keys to their new flats are ready for collection.

NorthwaveECPrivate property prices may have declined in single-digit percentages, and while that narrows the gap between smaller non-landed private property units and more expensive public housing options such as executive condominiums (EC), resale flat prices have budged only slightly which may not be sufficient for those who fall between these price segments. Prices of resale HDB flats are expected to have up to a 0.5 per cent price rise in 2017.

 

New private home sales figures on track for H4

Though there was a 31.4% fall from October’s record sales of 1,253 units, the year is nevertheless set to end on a cheerful note, as spirits in the new private home market are buoyed by a 13.3% year-on-year spike last month with developers selling 860 units in November alone (excluding the 250 new executive condominium units sold). The fourth quarter has clocked a 2,500-unit sales figure thus far and property analysts say the projected market figures are are on track as the year-end is usually a quieter time for the property sector.

parcriviera2Even before numbers for December are consolidated, the number of new homes sold this year have already crossed 7,769, which is already more than the total of 7,440 homes sold last year. The lowered private property prices have attracted a considerable market audience, with most going for units with lower quantum prices. Most buyers are hoping to score a good deal before prices bounce back up, and have shown interest in smaller one- and two-bedders. The demand for larger units are slightly lacking in comparison.

queenspeak2Units at the newly launched Queens Peak condominium development in Queenstown and Parc Riviera in West Coast Vale were the month’s best sellers. Most of the units sold were priced under $1 million with 185 such units sold at Queens Peak and 110 of the sme at Parc Riviera. A positive outlook on the private home market next year seems likely with a projected 8,000 number of new homes sold by end of 2016.

2017 to welcome more land supply

Recent tenders on land plots have received more than positive responses from developers, plus the inventory of unsold units have diminished. This may mean the authorities are likely to release more sites in 2017 to replenish land supply.

fd1a3ab7647f44a684a37926cd526cb6The government held back on land sales in the earlier part of 2016 when unsold stock ballooned. But as buyers slowly returned to the market, investors picked up bulk sales and developers closed en bloc deals, competition for available land have been obviously heating up in the past months. If land supply continues to diminish, developers may be forced to bid even more aggressively and thus push up private property prices, in particular in the executive condominium (EC) market.

Some of the highest-bid land sites this year included a Martin Place plot which went to First Bedok Land for $595.10 million, and a mixed residential and commercial plot with a winning bid of $301.16 million by Qingian Realty. A white site on Central Boulevard was also sold to Wealthy Link for $2,568.89 million in November. There were 11 sites on the Urban Redevelopment Authority’s (URA) reserve list in H2 of 2016, with possibly up to 15 more added to the list by H1 of 2017.

The Ministry of National Development (MND) will however be more selective about where the new sites will be released, likely avoiding areas where large amounts of unsold inventory remain such as Redhill and Commonwealth.