Private homes sales show slow and steady improvement

Twin-Peaks3Private non-landed property prices have been rising for 2 consecutive months now, a positive sign considering the recent market lull. Though values and volume are still lacking behind that during the peak of 2012 and 2013, any slight improvement is something to cheer for.

In April, the jump in non-landed homes sold was 17.6 per cent, a considerable 28.1 per cent higher on a year-on-year comparison with 2015. A total of 689 non-landed private units were sold last month. Property analysts are happy with the recent progress as it shows that the market is not completely dismal, and buyers will still bite if the prices are right. Resale private home prices similarly rose for 2 months straight, though the percentage were more modest with a 0.1 and 0.5 per cent increase in March and April respectively.

The residential developments which showed the most positive uptick were Twin Peaks in Leonie Hill, A Treasure Trove, D’Leedon, Double Bay Residences, Parkview Apartments, Thomson 800 and Carribean at Keppel Bay. The highest rise in home prices were in the core and central regions with a 1.3 per cent increase, while resale home prices in the suburbs fell 0.2 per cent.

Double Bay Residences SimeiAs the mid-year closes in, these 2 months may set the tone for the rest of the year, though much still hinges on how both local and global economies fare. Buying abilities and sentiments may follow suit.

More resale condominiums falling under affordable price range

Not so long ago, prices of private condominiums were creeping beyond the $1 million mark, but with new units bursting into the scene and the competition in the private property market heating up, developers and sellers alike have had to find a new pricing sweet spot.

CityLightsBuyers have become more aware and sensitive to market prices ever since market data and statistics became more readily available from URA and other property news and research sources. Now, it is not unlikely to find resale private properties available at below $1 million. And some are reasonably-sized units too. Previously only shoebox apartments or one-bedders are likely to fall below the $1 million mark.

Most of the the developments with such affordable resale units are in the city fringes, including Citylights in Jalan Besar, Domus and The Tier in Novena, Wilkie 80 in Dhoby Ghaut, RiverBay in Bendemeer and RV Edge in Tanglin.

Despite the weaker property market, resale properties are still selling at 20 to 25 per cent above the prices of new units and sellers can still look forward to some long-term value appreciation. Property analysts however advice buyers to be aware of their financial commitment as buying resale properties mean the property mortgages kick in immediately and with a softening rental market, the yields may not come in as quickly or as much as projected.

 

Private condominium prices hold steady

The fall in completed private condominium prices was gentler last year at 3.5 per cent, compared to the 5.7 per cent from the year before. Prices are expected to hold steady this year as a dip in supply of properties in this sector bring prices to a plateau.

Jewel CDL

Photo: Jewel @ Buangkok

Demand for smaller apartments of up to 500 sq ft in size, have been weakening as their numbers, especially in the suburbs, have been on the rise in the past couple of years. Investors have found them more difficult to rent out in the dulling leasing market and those outside the central region or further from regional business hubs may find themselves competing for the same tenant pool. Tenants now prefer units with larger floor spaces with just slightly higher rents.

Sale prices of completed private properties within the central regions however have fallen more sharply as they usually come with a higher total quantum price. Compared to the many newer properties which have found a sweet spot with their total selling price, units in these central or prime districts see fewer overall transactions.

As the volume of unsold completed condominium stock diminishes and with the fewer launches expected this year due to cutbacks on land supply, resale properties could expect a happier year ahead.

When investing in properties overseas …

There are a number of things to look out for when investing in properties. And even more so in properties overseas. It may be familiar ground if you know your stuff, but otherwise it could be a rather risky affair.

Balmain ColgatePhoto: Apartment in Balmain, NSW, Australia.

Every country’s investment environment varies, sometimes quite drastically, and while brochures and presentations may look sleek and professional, the ins-and-outs of the local economic infrastructure may speak the same language. Thus finding out more about the legal and tax systems of the country in which the property is located would be one of the first and most important steps. The Council of Estate Agencies (CEA) has good advice for investors in their consumer guide for foreign property investments. Some countries have restrictions on the type of property foreigners can purchase, and also on whom they can eventually sell it to and the about of taxes or stamp duties they have to pay. In Australia for example, foreigners purchasing property have to seek approval from the Foreign Investment Review Board; whereas in Cambodia, where the market is just opening up, the restrictions are not as limiting.

Similar to how you would plan for any major investment, doing the groundwork and sums will help you financially. It is wise to know what your options are should there be a need to sell, and how long it would take you to do that would depend on the political and economic situation. Make the effort to find out the developer’s track record, and even take a trip down to look at the properties. After-sales property management could sometimes make or break your bank account and familiarising yourself with the legal systems of the country could ensure you are well-covered in unexpected circumstances. Having a solid point-of-contact in the country, such as a property agency or management agent could also reduce the risk and make the investment experience a smooth-sailing one.

Buyers picked up properties worth $102.27 million at auction

Rising interest rates and restricted loan options may have amounted in more properties going under the hammer this year. Though the number was not drastically different from last year’s, the total property value fetched at the auctions was much higher. The total value of properties sold at auctions this year is currently at $102.27 million, the highest in these past 5 years. Last year’s total auction value was $72.5 million.

LuckyHeightsBungalowPhoto: Bungalows at prime locations could have high projected values.

Residential properties were the main draw at these auctions. And figures have been on the rise since 2009. A total of 34 properties were sold at the auctions this year, and out of that 26 were private homes. That is almost double of the 46 per cent of private properties in auction in 2013. Property analysts are expecting the list of residential mortgagees to grow next year as the combined effect of a dampened rental market, increase in supply of completed homes, interest rate hikes, prevailing property cooling measures and a general sense of a slowing economy, sinks in.

One of the largest sales this year includes $16.3 million single-storey bungalow at Branksome Road. The projected value of its redevelopment may have made it a bargain buy, even at the hefty price. For developers and investors hunting for a worthy investment, these mortgage sales may be fertile ground.

More launches ahead in the North-West

August proved to be a slow month for the private property market as the lack of new launches and the Hungry Ghost month made a tiny bump numbers-wise.

The number of homes sold were similar in a year-on-year comparison with 2014, and while it is comforting to know that the numbers are level, the overall primary sales figure of 7,400 units sold last year is below the ideal 10,000 to 12,000 units per year primary sales volume. The resale private property market is largely dependent on the primary sales market thus home sellers as well as developers are all hoping for more vibrant sales of new properties.

PrincipalGardenThe last quarter of the year may be more promising as there are a number of new launches coming up. This includes Principal Garden in Prince Charles Cresent, and a slew of executive condominiums (ECs) in the North and North-west, namely: Signature @ Yishun , Wandervale in Choa Chu Kang, The Criterion in Yishun and Parc Life in Sembawang.

The most recent EC launch was Sol Acres in Choa Chu Kang. So far, 259  units have been sold at approximately $787 psf. Despite the recently-announced increase in income ceiling for EC applicants from $12,000 to $14,000, the uptake for EC units seemed to have stalled somewhat, with an increasing number of units unsold.

Property analysts are chalking this up to a lull month, the location of the properties, tightening loan limits and the developers’ track records. But will the upcoming EC launches fare better?

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.