Seller’s Stamp Duty packs a punch

The Total Debt Servicing Ratio (TDSR) and Additional Buyer’s Stamp Duty (ABSD) have been hogging property news for some time now, but the Seller’s Stamp Duty (SSD) has packed quite a punch of its own as well.

SeascapeThe Seller’s Stamp Duty (SSD) is seldom mentioned, but ever since its implementation in 2011 to curb property speculation, it has collected up to $70 million in non-landed property transactions. February 2015 marked the record high in SSD collected. One of the biggest losses for the seller was a unit at the Seascape condominium at Sentosa Cove which sold in May with a $5.43 million loss. Another unit at Four Seasons Park incurred a $2.64 million loss as well.

How does the SSD work? For properties purchased after 14 January 2011, should the property be sold within the first year, the SSD comes up to a whooping 16%, then lowered to 12%, 8 % and 4% after the second, third and fourth year. Should you sell after the fourth year, the SSD will no longer apply and you will be saved from having to pay any additional seller’s stamp duties.

Though tough, industry analysts consider the SSD an effective tool in curbing property “flipping” and consider it mild when compared to the ABSD which is levied on foreign home buyers and Singaporeans purchasing second and subsequent properties. These do not have a time limit, and unless the regulations are amended in future, will continue to take a fair bite out of profits.

Australian properties getting pricier

When the property cooling measures kicked in for the Singapore property industry, many investors turned to overseas properties. Properties in Australia, the United Kingdom and Malaysia were particularly favoured by Singaporean buyers as these were the more popular overseas education spots for local students.

Sydney Mosman FlatBut it seems the property prices in Australia are gaining momentum. For 10 quarters in a row, prices have risen, led in particular by a leap in home prices in Sydney. Across the board, prices have risen by 1.6 per cent but in Sydney, prices have been reported to grow by 13 per cent on a yearly basis. Australians are seeing this as a threat to the affordability of their city and once again broaches the topic of immigration.

Banks’ interest rates are however considerably lower now, down to 2 per cent in May this year. Has this allowed or enticed more to secure a loan and how will this eventually affect the industry when rates start rising and might there be a danger of the rehash of the United States’ property bubble here? The Australian authorities have already tightened the loopholes in their foreign investment policies and foreign property buyers now have to abide by stricter rules under the Australian Foreign Investment Review Board. Ultimately, it may be up to the policy makers to steer the market in a direction which balances on the knife edge between economic growth and nationalism.

Sentosa Cove units fetch high prices once more

There was a time when luxury properties on Sentosa fetched luxurious prices. That time was more than 2 years ago. The property cooling measures have hit home since their implementation over the past couple of years however, and sales number sand prices have dropped with the imposed additional stamp duties and loan restrictions.

TheOceanfrontBut there may be light yet in the horizon. Recent sales of 2 units at The Oceanfront condominium apartments in Sentosa Cove luxury enclave have soared above the $2, 000 psf range despite their lack of a waterfront view and their low-floor  Previous sales, which were few and far in between, have gone as low as $1, 190 psf. That was a $463 psf loss on a $1, 653 psf second-storey apartment at The Coast. Considering the fact that most mass-market homes on the mainland are already going at the $1,000 psf range, prices have declined substantially since its peak in 2008.

Will investors with deep pockets continue to pick up deals on the island, especially as prices dip? And will those who have already purchase units on this exclusive waterfront-living enclave continue to hold off on selling in wait of prices rising in the future? How much more will prices be able to rise and will the competition with units on the mainland only become fiercer?

Private property prospects for the next 2 years?

The Singapore General Election may be coming up in the next year and a half, and that leaves most wondering about possible policy shifts and how that would affect the country’s economy. Since the last election, immigration and loan policies have changed rather substantially, both of which have impacted the property industry in a number of ways.

Melrose VilleOn the financial front, the TDSR (total debt servicing ratio) framework has been effective in slowing down property demand. With the likelihood of interest rates here rising in tandem with US rates, it seems unlikely that this policy will be removed or relaxed anytime soon as it aims to help households and borrowers build a clearer structure around their long-term financial stability.

A decrease in immigration numbers have also affected the property rental industry, with vacancy rates possibly hitting 10 per cent at the end of 2015. Coupled with a growing number of completed new units made available within these 2 years, the supply could majorly outweigh the demand. Property experts suggest that the only way to slow down the property prices and demand decline is to reduce the speed and quantity of new properties, and an adjustment of the TDSR. There is no sign of change for the moment, but would next year bring about a fresh wave of changes?

Smaller private homes popular with HDB Upgraders

Whether for occupation or investment, HDB dwellers moving into the private property market are setting their sights on smaller units below 100 sqm priced between $750,000 and $1.05 million. Median sizes of purchased non-landed homes have fallen to 85 sq m.

This could be a good indicator for developers and resale private condominium sellers of the pricing sweet spot in upcoming launches. Prices of completed transactions of non-landed homes have fallen 5.4 per cent. But private property owners who are purchasing within the market are snapping up bigger units of up to 110 sq m. This could be due to the fall in prices since 2013 and the affordable total quantum pricing.

Pollen&BleuThe number of foreign property buyers have also decreased slightly, with most now targeting luxury homes tagged above $5 million. In addition to Singapore’s political and economic stability, established infrastructure and education standards, value-for-money property options continue to draw foreign investors despite increased stamp duties.

As the market acclimatises itself to the new dynamics of the Total Debt Servicing Ratio (TDSR) framework, increased stamp duties and other property cooling measures, the buyers may gradually re-enter the market. With the promise of new launches coming up in then next few months, the numbers could see a turnaround soon.

Fewer new private property launches

Despite lower sales of new private home last month, the percentage of sales based on the number of units launched, was positive.

The lower sales figure was mainly due to the lack of new property launches. But the take-up rate of the 499 units launched was at a happy 128 per cent in May. The take-up rate was only 84 per cent in May this year, compared to 82 per cent in April 2014. Considering the 21 per cent fall in sales in the first 5 months of this year, the leap last month is a promising sign.

HighparkResidencesLeading the sales were suburban launches at Botanique at Bartley, Northpark Residences in Yishun and The Panorama in Ang Mo Kio. Median selling prices were $1,232 psf at The Panorama, $1,292 psf at Botanique at Bartley and $1,397 psf at Northpark Residences. Competitive pricing may have lowered prices on some newer launches and this could have attracted buyers back into the market. There were even reports of private funds or group of investors who have picked up 16 units at 111 Emerald Hill.

In the months ahead, the number of new property launches will remain low, which may in turn affect figures. But instead of looking at across-the-board figures, sussing out potential deals in previous launches which are re-launchning new units could be the way to get ahead of the pack. Upcoming launches to look forward to are Gramercy Park in Grange Road and High Park Residences in Fernvale.

Resale private apartment prices remain level

Last month’s resale private non-landed property prices remained flat, which could be a sign that the market is bottoming out.

The back-and-forth quick-step between sellers and buyers is a dance familiar to market players, but they are expecting further falls in prices of 3 to 6 per cent, especially in the suburban resale property market. In the Central regions and prime districts, prices have fallen considerably since its peak in 2013, and thus it’s not surprising to find a rise in resale volume of late. Investors who have been on the lookout for prospective buys will be quick to jump on these units.

SimsUrbanOasisIn the suburbs, it is another picture altogether as prices have held relatively steady despite the property cooling measures. But the sheer number of new units entering the market, combined with the weakening leasing market, may bring an about-change soon. In addition, the per sq foot prices of newer condominium units have increased, due to their smaller sizes. What this could mean for the market is an expected further fall in prices as resale units will have to compete with the newer developments and the total quantum prices become more important for buyers.

But the industry could well expect and enjoy an increasingly positive resale volume as up to 6,000 resale units are projected to change hands this year.

 

Malaysian banks tighten loan rules

Even as news of the possibility of a property supply glut in the Iskandar regions break, Malaysian banks are beginning to tighten their rules about lending on property in these areas.

Since the Monetary Authority of Singapore (MAS) has implemented their Total Debt Servicing Ratio (TDSR) Framework, it has been harder for Singaporeans to secure loans. Some have turned to foreign banks, on the back of the strong SingDollar, as repayment is lower should the exchange rate be in the lender’s favour. It used to be possible to secure loans of up to 90 per cent of the purchase price of a property. But that may soon also prove more difficult as Malaysian banks are increasingly becoming more selective in lending to foreigners.

PonderosaWOods JohorNot only are the consumers feeling the heat of a possibly oversupply, competition is high in the developer, building and construction industries as well. Construction costs have increased, and the number of foreign developers and building firms competing for projects are also on the rise.

Despite a slight dip in interest from buyers since the announcement of a delay for the Singapore-Kuala Lumpur high-speed rail to 2020, some buyers remain positive about the potential of their Iskandar property, banking on a possible rise in the number of retirees and Singaporean families who may want to own a retirement or holiday home in Malaysia.