When will the property cooling measures ease?

Some of the first property cooling measures were implemented more than 4 years ago, and they have stayed till today. More were added along the way and the market seems to be finally responding to the restrictions, with prices and sales volume falling slightly since the 2009 peak.

Considering it took almost 5 years for a slight decline in property prices, the authorities seem determined to stick to their guns and have the property cooling measures in place at least for a little while more. But analysts are expecting a much steeper drop in residential prices of up to 15 per cent before the Singapore government is likely to ease up on the measures. They are likely to also be waiting for mortgage interest rates to rise above the 3.5 per cent average from before.

Especially as the elections have just ended, a sudden change in policies is unlikely as increasing housing prices could affect public sentiment. Although there has been pushback from citizens about immigration policies, and the increasing supply of new properties in then next couple of years may further keep rental and housing prices suppressed unless there is a drastic shift there. In the HDB market, they are expecting a further 5 to 10 per cent drop in prices before any change might be effected.

Will there however be a gradual easing of cooling measures by removing restrictions one at a time?



August shows fluctuations in property rental market


OneDusanIn July, private property rentals have fallen 0.3 per cent, and now August has reflected a further 0.4 per cent drop. The number of new units entering the market no doubt has made competition tougher. Most of the fall in prices were for properties in the city centre. Rental prices of city fringe units fared better, with a 0.8 per cent rise. Overall, the number of units rented out decreased slightly compared to the month before, but rose 13.8 per cent in a year-on-year comparison.

What does the future hold for the residential rental market? 2016 seems to point towards a further influx of new properties. It used to be normal to rely on rental yields from one property to fund mortgages on another, but now the investment path may not be as easy. Spotting the right investment opportunity would take practice and a lot of market research, though there are advice out there to be had. Attending regular property seminars and talks will help you gain useful insights to what’s available out there and the potential of differing property options.

HDBrentalThe market is currently seeing a circular migration of tenants and they move from property to property in search of better rental rates. But this ensures a fairly stable rental volume level, though rental leases favoured now are the shorter 12-month ones as opposed to previous 24-month norms.

While the private property rental market faces strong competition, the HDB rental market will maintain a strong showing as rental rates are more palatable and has a strong tenant base.

Private property market – The road ahead

The outlook for private properties seems a little vague for the moment. Though the market seems to be enjoying a respite, with prices maintaining its current level, and prices have risen slightly over the past two months, property experts are expecting an overall fall of 3 to 4 per cent in the Singapore Residential Price Index (SRPI) this year.

Buyers looking out for good deals are picking up units across both the central and non-central regions. Recent increases in the SRPI could be due to the rise in number of transactions especially in the central regions with 0.6 and 0.2 per cent increases in June and July respectively.

WoodhavenThe rental market, however, has remained weak, especially in the suburbs. And as rents begin to fall in the central regions, many tenants are making quick comparisons and opting to move into more centrally-located properties instead. For example, a private 2-bedroom condominium unit in Woodlands is being rented out for $2,000 a month, which is comparative to leasing a 3-room HDB flat.

But for buyers and investors who are considering purchasing private properties, investing in bigger resale or new properties may be preferable as smaller units will be facing fiercer rental competition once many of these units reach completion next year.

Sell now or later?

In real estate, it is often a timing game. How do you exactly know when to sell and when to buy? If you’re currently looking to sell your property, what should you be looking at for when making your decision of whether to sell now or later?

Just like buying a home, you first have to figure out why exactly you are selling. Is it to finance a new home upgrade, to invest in another property, or because you need the money urgently? The push factors are often stronger than you think when it comes to how much and how quickly you are willing to sell for.

KingsfordWaterbayAnother important question to ask yourself is “How much is my property worth?” Aside from getting a trustworthy real estate agent and valuator, spending a bit of time doing your own market research will help you determine where your property stands. A quick look at property websites, some of which provide tools to help you keep track of property trends and transacted property prices, or checking out resale HDB flat prices from the HDB website as well as attending property talks and seminars are just a few of the many ways to hone your pricing skills.

Market competition is also an important factor which affects pricing. Have a look at how other properties similar to yours are currently prices for a guide to pricing your property. But that said, if you know what qualities your property has above others in the market, list them. These may help you price above the market median. You do however have to be prepared to justify these premium prices and once you are confident the edge your property has, you will have a relatively easy time asking for higher prices. Location and proximity to transport nodes or schools are often a big plus; and sometimes the configuration of rooms, quality of renovation and age of the property could also be added to your property’s calling cards.


Resale HDB flat prices remain level

As the year moves quickly towards the middle of the second half, property sellers may be getting a little on edge about whether the property prices will fall further.

For the resale HDB market at least, property analysts are expecting prices to stabilise, with any fluctuations occurring only slightly on a month-on-month basis. Prices of HDB flats dipped slightly in July by 0.5 per cent, which is 4.3 per cent lower than July 2014. The fall in prices is still within the single digit range, and at the lower end of it, thus sellers could rest assured the boat will not rock too drastically. Most of the price drops were in the four- and five-room flats segment while prices of three-room flats remained flat.

The resale market for HDB flats seem to have taken a dive due to the bumper crop of BTO flats. Photo courtesy of Singapore Tourism Board.

Photo courtesy of Singapore Tourism Board.

Buyers looking to purchase a property within the year will still do so, and resale HDB flat prices and transaction volume looks likely to maintain at the current level for the rest of the year. The property cooling measures have taken a couple of years to take effect, and a sharp turnaround in prospects seem unlikely.

With a few more months to go before figures can be more effectively measured, property experts are nevertheless positive about the market stabilising soon.Though with a possible raising of the income ceiling which may draw buyers’ attention away from resale flats, and with the upcoming General Election in play, it could be anyone’s guess how property prices will fare by year end.

Rising property market – Vietnam

With a communist government, most would not have considered Vietnam potential ground for a thriving real estate market. Their property market suffered a severe blow about 4 years ago when property bubble burst, leaving banks in debt and buyers and developers defaulting on their loans.


Photo Credit: Phuoc Thanh Construction

But 4 years on, the government has injected stimulus into the real estate sector of up to US$1.4 million and has also restructured their banking sector to ensure history does not repeat itself. In fact, they have gone even further to relax rules on foreign investment money coming through their borders. Foreign firms, individual buyers as well as Vietnamese who have left the country during the war in 1975 – the Viet Kieu, are now able to purchase properties in Hanoi. And response has been overwhelming. One developer, Vingroup, reported a whooping 112 deposits on apartments within 2 hours of their launches specifically targeting foreigners and Viet Kieu.

Most foreign firms are keen to purchase properties to house their foreign staff. Intel and Samsung, which are situated in the Saigon Hi-Tech Park, are just a couple of the many international firms snapping up properties. Average prices of high-end apartments in the southern commercial hub go up to as much as US$1,800 per sq m. In the capital, prices are around $1,600, a number familiar to the property players before the last housing crisis. With a market value of US$21 billion, Vietnam’s real estate sector still has a way to go compared to Singapore’s US$241 billion, but that difference could be what most attracts investors.

Resale private homes – Slow climb up

There was a glimmer of light in the resale property market last month as prices of homes in the city fringe rose 1.1 per cent and 0.5 per cent in the suburbs. Overall private resale home prices rose 0.4 per cent.

BlueHorizonThough property analysts are not certain if prices will maintain their current level or dip even further in the later part of the year, the numbers gave at least a little hope to private property owners and sellers. While the resale market shows that it has steadied itself with a $0 T-O-X (the median transaction over X-value or a home’s market value), in the city centre district 9 which consists of Orchard Road and River Valley, more resale properties were being sold below the computer-generated  home prices dipped to an average of $55,000 below the X-value.

In district 5 of Pasir Panjang and Clementi however, the highest media T-O-X came up to $30,000; and in the Bukit Timah, Holland Road and Tanglin areas of prime district 10, the number came up to $14,000.

As the number of new properties being launched or completed rise, the prices of resale properties may face the danger of being pushed down by competition. Though location and condition of resale units may always have an upper hand. With the General Elections planned for the year ahead, prices may fluctuate with policy or economic changes. Could this year be the watershed year for the property market?

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?