Property auctions at a glance

What happens at property auctions and are there truly good deals to be had? There has been an increase over the past couple of years in the number of properties put up for auction, with 516 properties listed for auction last year – a 45% increase from 2014.

TurquoiseCondoNot all auction sales are from mortagee’s sales (i.e. when a bank puts up the property for auction when the owner defaults on his loan payments) though they do make up an increasing percentage of property auction listings. In 2015, about 30 per cent of auction sales are from mortgagee’s sales. And contrary to popular belief, the properties listed at auctions do not necessary come with absurdly low prices and not all property owners of these listings are in a hurry to sell. Only about 1 or 2 properties are sold during the auction, with most others finding buyers following post-auction negotiations. Some property agents and buyers are there to see what options there are in the market, and almost everyone comes prepared, with a clear idea of market values and trends. Some owners even attend such auctions as a form of research, to better understand what their property is worth by comparing similar units offered at such auctions.

Parc EleganceWhile rock-bottom prices are not be expected, most listing vendors are more willing to budge on pricing by offering deeper discounts. As a guide, most properties valued at $3 million and below usually come with a 5 to 10 per cent discount while properties with price tags beyond $5 million may have even higher discounts. A recent auction sale of a $5.4 million unit at Turquoise in Cove Drive in Sentosa saw the bidder walking away with the unit at $2.92 million, $60,000 more than the opening bid of $2.86 million. Quite a steal, considering the $2.48 million difference. For property investors, auctions though not without risks, may be a good way to secure unique units which they can then profit from thereafter.

Some of the companies which organise property auctions are Knight Frank, JLL, DTZ and Colliers International.

 

 

High demand for bigger units in mature estates

Senja HeightsAccording to response from applicants for the latest HDB sales launch of BTO (build-to-order) and SBF (sale of balance) flats, bigger units in mature estates seemed to be most hotly contested.

3,770 BTO flats were rolled out in last week’s launch, with units available in Ang Mo Kio, Bedok, Bukit Panjang and Sembawang. In addition, 5,170 SBF flats were also available for selection across 29 HDB estates. The units in Bedok and Ang Mo Kio were most in demand as these mature estates have well-developed infrastructure and some buyers who have lived there most of their lives prefer to move within the estate.

bedoknorthwoods

Photo credit: HDB

Will this mean a corresponding demand for resale flats of similar size in the same estates? It is debatable as prices of larger resale flats have already been falling as demand waned. As the availability of new units direct from HDB, and options of going into the private property market beckons, HDB upgraders will have quite a few pros and cons to weigh. While private homes within the same price range may be quite a lot smaller, rental and future value appreciation of selected private properties may entice buyers. On the other hand, upgrading within the resale HDB flat market may get you a larger unit though not necessarily with future sale benefits. Rental demand however could still be high should the unit be near a MRT station, school or other amenities.

Small gems win big

Gem residences in Toa Payoh has already sold more than 55 per cent of their 578 units in their weekend launch last weekend. Median selling prices were at $1,426 psf and analysts are happy to report this a success as most new projects receive bulk of their sales within the first 2 to 3 weeks and a 50 per cent sales rate within the first month is already a positive sign.

Gem REsidencesAnd the prize came in small packages as units below 1000 sq ft were the clear winners last weekend. Approximately 60 per cent of all their 471 units below 1,000 sq ft have been sold while buyer picked up about 20 bigger-sized units. Gem residences is developed by Gamuda, Maxdin and Evia Real Estate. As Gamuda Land‘s first project in Singapore, the response is a happy one probably because prices were kept realistic and affordable. Their 980 sq ft tri-key or trio units were popular picks, 5 of their 37 units have been sold thus far.

The TerraceOther new launches which recorded sales over the weekend included Stars of Kovan with about 70 units sold of date, The Trilinq, Sturdee Residences, The Poiz Residences, Principal Garden, Botanique at Bartley, Symphony Suites, The Terrace, Sol Acres, The Amore and Bellewaters.

 

Resale HDB market sees rise in sales

The number of resale HDB flats exchanging hands in April rose by 10.3%, a positive sign despite prices remaining level. The last time sales volume exceeded the 1,800-unit mark was in October 2012. 1,828 units were sold in April this year.

Though property analysts are wary about calling this a market rebound, the increase in transactions could mean an eventual decrease in the number of resale flats available. Depending on how far the price gap between private property and resale HDB flats goes, the diminishing stock of resale flats in the market may entice buyers to purchase sooner rather than later. And the increase in rarity could also mean the increase in prices.

Serangoon HDB flatFor the moment however, the buyers may still have the upper hand as most are buying only after having waited for prices to fall. The cash-over-valuation prices are almost all gone, and with the purchasing process adjusted, buyers are less likely to fork out additional monies above the valuation price. In addition, data pertaining to resale flat prices can now be more easily accessed, thus buyers are seldom willing to succumb to sellers’ high asking prices.

HDB flat prices have stagnated for almost a year now, though the fluctuation either ways has not been drastic. Last month for example, 3-room flat prices rose by 0.6 per cent though 5-room flat prices fell by 0.9 per cent. This could be an indication of what the buyers are now looking for. As the population and policies shift, the property market will also need to adapt quickly to their changing needs.

It’s an EC world

Executive condominiums are some of the hottest properties on the buying public’s radar this year. These rare hybrid private-public homes straddle the 2 markets in the best way possible. While they begin their journey as public housing, thus allowing qualifying buyers to make use of government subsidies and loans to secure a usually cheaper-yet-comparable alternative to private condominium units, they graduate after 10 years to the private property market and their values more often that not appreciate considerably.

WandervaleECOne of the first ECs to be launched this year include Wandervale and The Visionaire. The Parc Life will soon be launched. Even though the nearby 1-327-unit Sol Acres EC might have been competing for buyers , 320 out of the 534-unit Wandervale EC in Choa Chu Kang has been sold.  Most of the units popular with HDB ugpraders and young families were the 4-bedders. 82 were sold in total. Prices averaged at $755 psf with a 3-bedroom apartment starting at $655,000 and the larger 4-bedders going for more than $896,000.  The Wandervale’s proximity to the Choa Chu Kang MRT station could have added to its popularity.

Besides The Parc Life, other EC launches in the works include Treasure Crest in Sengkang, Northwave in Woodlands and another in Choa Chu Kang.

How deep is the property market well?

Property prices in Singapore have been falling since 2014, 10 consecutive quarters to be exact. In the first quarter of this year, HDB flat prices have stabilised at 0.1 per cent while private property prices have dipped 0.7 per cent. In 2015, HDB flat and private property prices fell an average of 0.4 and 0.9 per cent respectively.

Kingsford WaterbayPhoto: Kingsford Waterbay condominium 

HDB flat prices have begun to stabilise of late, though some property analysts are still expecting a further drop in the second half of the year as 25,000 new BTO flats reach completion this year. A good 30 per cent of these new-flat buyers are upgraders and home owners, not investors, which means they will be looking to sell their existing HDB flat in order to finance their new flat. This will bring a new slew of units into the resale HDB flat market. Though the demand for resale flats has not waned much, the rise in supply may put the ball in the buyers’ court.

 Photo: Clementi Gateway BTO flats

Similarly in the private property and EC (executive condominium) market, buyers will need to time their upgrading manoeuvre in order to manage cash flow, thus some may be in a rush to let go of their existing unit which could put further pressure on the market which will be seeing 21,906 new private condominium and 4,561 EC units enter its midst this year. How will the property sector perform in this crucial second quarter of 2016?

High vacancy rate hits property rental market

The days of brisk rental demand for private apartments could be going as the high number of vacant private property units in the market reached a record 10-year high at the end of 2015. Rents have fallen 4.6 per cent last year and analysts are predicting a 6 per cent drop this year.

Cassia EdgePhoto: Cassia Edge condominium

With the sheer number of new condominiums and smaller units introduced into the market in the last five to ten years, the opportunities for investors with varying financial capabilities have expanded vastly. Many of them have purchased smaller suburban units for investment purposes but 2016 may not bode well for those looking for a quick turnaround in terms of resale or rental of these units. The number of new condominium units hitting the market this year will mean increased competition for a diminishing tenant pool which will squeeze rental prices downwards. Many landlords are already finding it difficult to find tenants with the same asking prices as before, and have found it necessary to lower prices by 10 to 20 per cent.

Districts 19 and 20, which includes Bishan, Ang Mo Kio, Hougang, Punggol and Sengkang, will have the highest number of new units in their midst this year – approximately 8,200. This is despite the fact that rental prices have not risen much in these districts over the past 3 years. Property experts are however positive about the huge redevelopment of the Seletar Aerospace park which may continue to provide the demand for rental units. In the eastern districts however, demand may be waning as expatriates working in the hard-hit financial and banking sectors could be leaving the country.

Foreign buyers favour luxury properties in Singapore

Private apartments up to the size of 506 sq ft, more popularly known as shoebox apartments, have been having a hard time finding new owners as prices of completed units fell 1.1 per cent. However, non-central region private apartment prices rose 0.3 per cent in February and central region units have fared surprisingly well.

St Regis ResidencesThe recent sale of a $15million St. Regis Residences penthouse may have given the owner in a $3.3 million profit margin and given last month’s figures a boost despite the low sales volume. Overall, private property prices rose 0.4 per cent last month, following a 0.2 per cent rise in January. The luxury property market has not been in the best of health last year, but things may be taking a turn for the better.

Though property analysts are conservative about their predictions of a market turnaround this year, it is nevertheless a glimmer of light. With rising home prices in London and Hong Kong, foreign buyers are taking a second look at properties here in Singapore for investment purposes. Approximately 92 per cent of the sales and subsales transactions registered in the core central region come from foreign buyers.

Sturdee-ResidenceProperty investors with less holding power may be pushed to sell their units, in particular the smaller ones as rental prospects have dimmed, as oil, gas and marine sectors wobble.