Property – To buy or not to buy now?

Since the implementation of property cooling measures by the government agencies, property prices have fallen at a gradual pace and seem to have currently reached a plateau. Some may have been waiting for an opportunity to hop into the property buy-sell train, but others may be concerned about whether they should sell now or later.

How do you decide if the time is now or later?

The WaterlineThere are a few fundamental questions to ask yourself:

  • Need or want?

Of course, owning a home of your dreams is the ultimate desire for most. And so it is a want. But you will need to evaluate your situation very honestly – do you absolutely need a new place? Or could it wait? Are you hoping to merely flip a property for profit, or have the ability to hold out for the best deal? If you answer is “Need”, then you have to a few other considerations to take care of.

  • What’s in the piggy bank?

Do you have enough left in your savings and monthly earnings, after setting aside sufficient funds for your monthly bills, every day expenses and insurance to manage the risk of buying a home? Besides having enough to make your monthly mortgage, most people may not realise the need to have an amount within your savings for very real and unforeseen situations such as periods of unemployment or health issues.

  • Are there advantages or pros? 

Is the price on the property you are hoping to buy right? If there is room for negotiation, which is why an experienced real estate agent is a boon, and the mortgage calculator helps you compare rates and tells you that the interest rates are prime, then perhaps the time truly is now.

Buy yourself an island home away from home?

Instead of paying for hotels when you travel for a weekend island getaway, why not buy a home of your own?

Bali VillaResidential property prices in one of Singaporeans’ most popular island hotspots, Bali, have risen by up to 15% in 2014. Compared to a 5 per cent rise of properties on the Spanish Island of Ibiza and a fall in prices of up to 8 per cent in Sardinia, Italy; it seems investment money is mostly travelling to one of the most popular island in the Indonesian Archipelago. For investors looking for potential international properties, this could be the prime spot and time. Especially as the Indonesia government are in the process of making it easier for foreign buyers to own luxury apartments in the country. Changes are expected to happen in as little as 2 to 3 months’ time.

This will apply not only to properties in Bali of course, but also in other Indonesian cities. The next other most popular city in Indonesia is Jakarta, considering the number of Singaporeans working there.  Currently, buyers are only allowed to purchase leasehold properties. With most foreign buyers preferring to purchase freehold properties, it will be interesting to see what policy changes the government comes up with. There has been talks about proposed amendments to the regulations with foreigners restricted to purchase of luxury apartments and not landed homes.

 

 

New properties on a fresh new ride

And hopefully it will be an upwards ride.

May 2014 was a good month for the new private home market. Mostly due to the large number of properties launched, 1,487 units were sold. But after that huge spike, sales have held steady at around 300 to 400 units sold per month, with December’s showing a little lower due to the festive season.

KingsfordWaterbayThe numbers have however increased significantly in March this year, from 390 units sold in February to 613 last month. The results are promising, but there has been a few recent launches of new units at previously launched developments and also a release of pent-up demand after the Chinese New Year festivities, which could account for some of the positive vibes.  Most of the sales came from Kingsford Waterbay with 155 units sold and Sims Urban Oasis with 107 units sold. New launches are pulling out all the stops to get buyers’ attention. Competition will be high as more launches are planned for the year, thus getting first dibs with the buyers’ pool is crucial for developers.

Suburban properties are often priced below city fringe and central district properties; at 22 per cent lower than city fringe and 43 per cent lower than central region homes. Lower quantum prices seems to be the factor helping to close deals, as the property cooling measures do not work in favour of most middle-income buyers. The Skywoods and Symphony Suites projects seemed to stacked up better, but sales at Northpark Residences and Botanique @ Bartley may very well give them a run for their money soon, looking at the response from the public.

The outlook for the market this year seems spotted, with possible glimmers of hope but also tough restrictions which may put a damper on sales volume and prices.

 

Private properties – Not all in the slumps

Recent figures showed that the property cooling measures have only really affected the luxury market, which has slipped into the red.

Even then, there are properties within the private property market which have not been as drastically affected by the measures and market slump. At Cote d’Azur in Marine Parade for example, prices rose by 4.3 per cent. Prices of resale units at Costal del Sol also rose 4.5 per cent. And for the new property market, in Chestnut Avenue, selling prices of units at Eco Sanctuary showed a promising increase of 4.1 per cent.

Eco SanctuaryAlthough this could be caused by developers choosing to release juicier units later in their launch schedule, enticing buyers to purchase at their latest launches, this nevertheless gives hope to the market. Buyers are still wiling to fork out the cash to get the units they want. And there is no lack of these savvy folks.

Naturally as with all market movements, effects are never seldom felt the same way across the board, there will be units with more potential than others. It takes a keen eye and a close followup of market trends to make a killing at the right time.

While this is good news for property developers and sellers, it raises the question of whether the property cooling measures have really been effective in making property purchasing affordable for the majority, or only instead stymied the inflow of foreign cash earnings in the high-end property market?

 

Are resale home prices stabilising?

After January’s dip in resale private property prices, February’s fall was considered slightly more positive. It was less steep for one, at 0.3 per cent as compared to January’s 0.9 per cent. Buyers have been waiting around for prices to slide further, but they seemed to have held firm. The prediction for January’s fall was originally 1.6 per cent.

Tre ResidencesLuxury homes took the brunt of the hit, with those in the city centre suffering an obvious softening demand. Suburban home sales remained level. Some of the market movements could be due to the lack of new property launches in February and the lack of activity during the festive Chinese New Year period.

Prices of shoebox apartments have been uncertain of late, as more have been completed are are now ready for the rental market. This in turn may have implications for the latter as competition runs high. Tenants now have fresh pickings to choose from and may have the upper hand when it comes to price negotiations.

In the months ahead, buyers and investors can expect a slight market shift, but not necessarily a significant one. It will be constant cha-cha between buyers and sellers and they try to suss out the other’s expectations.

2015 – A year of the property buyer

Following the footsteps of 2014, this year seems like it will continue to be a buyer’s market. Some property hotspots have sprung up over the course of last year, as new MRT stations and areas of redevelopment were announced.

Twin Fountains Executive Condominium in Woodlands.

Twin Fountains Executive Condominium in Woodlands.

For buyers looking for a good deal, there will be sellers out there who are willing to let go of their property as not all are able to have the holding power to last out the year. Many HDB upgraders who are moving to private properties may have to sell their HDB flats, and due to a mortgage restriction, some private residential property investors may also be looking to move units in exchange of a healthier bank balance.

For buyers looking for immediate to medium term property returns, areas near upcoming MRT stations may be their ticket. These include those along the North-East Line (NEL) and Eastern Region Line. Other further flung districts which are experiencing an influx of amenities and new properties such as the Jurong Lake district, Woodlands Central, Buona Vista and Paya Lebar, may also pique the interest of investors. And for those who are not in a hurry to reap the benefits from their property purchase, property analysts are expecting districts which have not been included in previous upgrading and redevelopment plans, to get a major face lift within the next decade or so. Woodlands could be the next area to watch.

Thomson MRT Line's alignment. Are you already area-spotting for the best property investment?

Thomson MRT Line’s alignment. Are you already area-spotting for the best property investment?

Starting from the second quarter of the year, sales are expected to pick up, and industry experts’ advice for buyers are to keep a clear idea of what they are looking for, search for sellers who are sincere about selling, and hit the iron while it’s hot.

Almost all Lake Life EC units sold

At $799 to $930 psf with starting average prices of $685,000 for a 2-bedder to close to $1 million for a 3-bedder, units at the Lake Life EC in Jurong flew of the shelves over the weekend. Only 12 out of its 546 units  were available as of yesterday.

Lake Life ECThe palatable quantum prices of units at the executive condominium (EC) by Evia Real Estate could be the main draw. With a lower loan limit and other cooling measures in place, property buyers are now on the lookout for properties with a lower total selling price rather than focusing on per-square-foot prices. Evia Real Estate has done their homework well, and projected that the deepest pockets of buyers for the Lake Life, according to the demographics of the Jurong district, would be not more than $1.1 million. The pent-up demand for ECs may also have accounted for much of the rush for units in this quickly developing region. The Jurong and Jurong Lake district looks set to be one of the newest and busiest areas for development under the government’s island-wide growth plans.

URA Jurong Lake District

Photo credit:URA

In fact, some of the buyers were originally considering private properties in the area but decided instead to go for the EC options instead. Many saw it as a good investment even though they were purchasing units to live in for the moment. Executive condominiums are a hybrid between public and private property and can be sold after a 5-year minimum occupation period (MOP) in the open market. After 10 years, it will become a private property and may fetch even higher prices.

The other 2 ECs entering the market at the same time are Bellwoods and Bellewaters, developed by Qingjian Realty.

Housing supply to slow down in 2015

The authorities have announced that public housing supply and land sales will slow down come 2015 as the market has showed signs of cooling and stablising after the many rounds of property cooling measures rolled out over the past year or two.

West Terra HDB Bukit BatokPhoto Credit: HDB

The Minister for National Development, Mr Khaw Boon Wan, has commented in a blog post that the supply of new HDB flats will slow by 25 per cent next year. There will only be 4 launches next year, compared to the usual 6 per year. Each launch usually puts out up to 4,000 new Build-to-order (BTO) flats. The rate of successful BTO flat applications has been on the rise as reflected in the few recent launches. More married couples achieve success in getting their new flats, and the authorities have been allowances for couples either opting to apply for a flat with their parents, or for one near their parents. In addition, parents who opt to apply for a flat in a non-mature estate to be near their married children, will also receive priority.

The slight shift in policies may ensure that families remain close-knit and are able to receive help when needed. It may also help with a shift in aging mature estates and introduce a more age-balanced population per HDB estate. Mr Khaw Boon Wan also hopes that the move will help newlyweds plan for a family more efficiently and in turn increase Singapore’s population with a higher birth rate.

In the private property sector, the number of land plots being sold for executive condominiums and private apartments has already been reduced this year, though the industry might see a further reduction come 2015. But will this mean a decline in the building, construction and property industries? Or has the previous land sales and launches been sufficient to keep the industry going for the next few years? Which part of the cycle is the property sector in at the moment and are we set for a boom or lull in the next year?