Good Class Bungalows prices peak

Against all odds, the Good Class Bungalows (GCB) sector of the luxury property market has reached a price peak last month. Amidst the general market slowdown, luxury homes have been hit the hardest with a decline in sales volume and prices.

The average price for GCBs rose to $1,428 psf from the $1,405 psf in 2012. The rarity of these properties, plus their equally rare price tags, make them fodder for only the rich and wealthy. With their deep pockets, they may not be as affected by the recent property market slump as the everyday joe. There are only 3,900 Good Class Bungalows in Singapore, and they are located in gazetted areas. Only Singaporeans are allowed to purchases these properties.

GoodwoodResidencesWith the lack of foreign buying of local property due to the 15 per cent Additional Buyers’ Stamp Duty (ABSD) levied in 2013, the luxury home market has been on the downward slide for sometime. In Sentosa, where anyone, local and foreigner alike are able to purchase a property, only 3 bungalows were sold last year at a 20% price drop. Even with the lower prices, average selling price was at $1, 676 psf.

Non-landed luxury apartments also did not fare well last year. The most number of units sold were at Goodwood Residences. 41 units were sold at a median of $2,461 psf at this Bukit Timah Road property. This may be due to high competition in the market with 7 luxury condominium developments completed last year, including Ardmore 3, Le Nouvel Ardmore, Sculptura Ardmore, Tomlinson Heights, Hana, Nouvel 18 and TwentyOne Anguillia Park.

Property market cooling in Malaysia as well?

Singapore aside, it seems the property market is cooling just across the border as well.

Similarly, higher interest rates are expected for the year ahead, and with weaker buying sentiments and a possible market saturation, property experts are saying that the property developers’ expectations and pricing will be the main factor determining a slowdown (or not) or sales this year. There was an increase in the Real Property Gains Tax rates and the minimum purchasing price for foreign buyers in October 2013, which have affected those investing in properties in the region.

Cypress Villa PenangHome prices in Malaysia have been rising faster than incomes. Could a bubble be slowly forming? How will this affect investors? In the past, it may have been easier and cheaper for foreign buyers to purchase a property in Malaysia, but when it comes to rental and future resale possibilities, the prospects may be slightly dimmer now as locals may not be able to afford and there are rules against selling the properties to other foreign buyers. Without a constant rental yield, the property could become an empty shell.

When purchasing overseas properties, selecting a good location may help shield you against some of these risks. And doing as much research as possible, finding a reputable agent, attending investment seminars and talks, will give you the tools to do just that. Home prices in Johor for example, are still on the rise, with a 5.44 per cent growth in Q3 of last year, albeit a drop from 10.93 per cent in Q1. There are still a reasonable pool of middle-income home buyers who are still looking for prime properties in this state, as well as select others such as Kuala Lumpur, Selangor and Penang. Singaporean investors may have the strong Singapore dollar as an advantage but a keen eye for spotting good launches and a sense of the right timing are what makes a worthy investment.

City fringe homes find their footing

Filling in the gap between luxury and mass-market homes are the city fringe properties. But sitting in this position means being more exposed to market forces such as a lull in the luxury property market, which may be a good thing as buyers may be looking at cheaper options. But a wider and possibly cheaper pool of options pop up in the suburbs in the form of mass-market suburban homes, this might be the first sector to suffer a backlash.

Sky Habitat condominium in Bishan.

Sky Habitat condominium in Bishan.

There has been a recent drop in city fringe home prices as developers are offering discounts to help boost sales. As the supply of these home increase, about 2,411 new units were launched in 2014, so will the urgency to move units. City fringe homes registered a 5.3 per cent price drop, as compared to 4.3 per cent in the luxury homes market and 2.2 per cent in suburban private homes.

Projects where prices were lowered include The Panorama in Ang Mo Kio, Sky Habitat in Bishan and D’Leedon on Farrer road. Though luxury homes hogged the headlines last year with their decline in sales volume, property analysts are confident that the price decline will be minimal as most owners of city-centre homes will have the holding power to hang on to their properties.

Home prices expected to decline further in 2015

This year, the rate of decline for private home prices is expected to exceed that of 2014. Last year’s drop was estimated at 4 per cent whereas this year, industry analysts project an 8 per cent drop. This new estimate for the private property sector will put it on par with resale HDB flats. In 2014, the public housing market reflected a 6 per cent drop in prices.

Some market factors from last year are here to stay:
1) Tightened credit market
2) Stricter immigration policies
3) Weakening demand
4) Increasing supply of new homes
5) Higher stamp duties

The Luxurie - near Sengkang MRT/LRT Stations.

The Luxurie – near Sengkang MRT/LRT Stations.

And while interest rates were at a low at a point in time last year, they are expected to rise this year, which makes for an even less favourable environment for a thriving buy-and-sell of residential properties in particular.

This may put a fair bit of pressure on home sellers, who may find themselves having to lower prices in order to make a sale. With developers competing for the same buyers with offers of discounts, rebates and other enticing options, resale private properties might struggle to stand out.

Landlords may also find that it’s a tenants market as an onslaught of homes become ready for occupation this year. The most recent residential projects to come into the market this year include the 622-unit The Luxurie and 590-unit The Riversound Residences in Sengkang.

Coupled with a number of new launches planned for this year, and fewer foreign buyers taking the bite, the only properties which may remain popular are mass-market homes in locations close to MRT stations, schools and shopping malls.

2015 – Outlook for Asia’s property market?

2015 is nearly here, and there has been talk that come next year, the property scene in Asia might experience some changes.  Investment interest in Asia property looks to be on the rise as portfolios which have yet to establish a presence in this continent consider it time to do just that.

ScottsSkyParkIt is probable that some governments might ease up on property cooling measures, thus making it easier for foreign investors. China-based investors have already been buying properties within and out of Asia. And as sellers lower their expectations and prices, they look set to continue doing so, if not more voraciously.

In Singapore alone, the outlook for office space looks extremely positive as supply remains low. With many more developmental and redevelopment opportunities arising within the next few years, the demand for office space is likely to rise, thus supporting commercial property prices and rents.

On the residential front, property prices are expected to see a drop of up to 10 per cent as the full impact of the large and fast increase of new properties finally hit the market. However, the luxury home market may see an influx of new investment money, especially properties will good long-term value.

More transparency with Property prices

The Urban Redevelopment Authority (URA) has recently hinted that even clearer property transaction price trends will be provided publicly come 2015. Within the first half of the year, property players, the buying public, and even policymakers will be able to get their hands on prices of individual units in developer-sold properties.
URA 2

Photo credit: Urban Redevelopment Authority (URA).

This may level the playing field as currently, even though median prices of units in each residential project is shown on the URA website, only when units have been purchased, and only those with caveats lodged with the URA will have their prices disclosed.

Part of the reason for the change could be the fact that more developers have been offering discounts and rebates of sorts on new units, ever since the cooling measures kicked in, which meant affordability have decreased and total quantum value has now become the new unit of measurement. As these discounts are often not registered in the caveats, the prices disclosed may not paint the entire picture.
iProperty price transaction page

Source: iProperty.com.sg

Buyers may be able to now better negotiate their deals instead of relying on developers’ statistics. How will this impact the market and while transparency is a mature way of moving forward, will developers be able to withstand the continued price decline? Or perhaps the question would be, how long more before prices hit the bottom of the curve and begin its upward climb?

The future of Singapore’s property market – Looking outwards or inwards?

The property industry experts are hoping that the Government will take crucial and timely steps to aid the country’s property and construction sector should trouble loom.

8scape Malaysia property

Photo: 8scape Residences in Malaysia.

Redas (Real Estate Developers’ Association of Singapore) president, Mr Chia Boon Kuah recently mentioned that the impact on the property sector could similarly transfer to an impact on the country’s overall economy. The vacancy moving forward is expected to hit 10 per cent as the number of new properties reach 68,000 in the next few years. Transaction volume has declined by half of last year from 18,000 to 9,000.

There were also talks about the languishing luxury property market here. The stricter measures and higher taxes may be reasons for wealthy investors looking elsewhere in the region for property investment opportunities and even draw Singaporeans away from investing within their own country.

However, with possible interest rates hikes and stimulus slowdown in the United States, interest in overseas property investment may be waning. As the local property market cools, and prices start coming down, some may also choose to take the wait-and-see stance, possibly holding their horses for a good future run in the local markets. How will the market fare in 2015 and will buyers be drawn to local or foreign properties?

Private resale homes – Dip in sales volume and prices continue

The number of resale transactions of private properties have dipped across the board and that in turn has affected the pricing index reflected by the SRPI (Singapore Residential Property Index). SRPI figures showed a 0.7 per cent drop in September, despite hopes that the market will rebound after the Hungry Ghost Festival.

STeven SuitesProperty analysts are reporting an imbalance in the expectations of home sellers and buyers. Stronger holding power of home sellers have meant that fewer properties were exchanging hands and they have instead opted to hold on to their properties till the market turns around. With the exception of shoebox apartments it seems. There was a price gain there of 0.4 per cent. This could be a clear indication of the preferences of buyers in the current market situation and perhaps provides an inkling of the months ahead.

One of the most affected property sectors are the luxury homes. Although buyers and investors of these high-end properties may not be detoured by the additional levies and loan limits, they may be deterred by the buying restrictions. And as the number of unsold luxury properties increases, developers are now offering discounts to entice them back into the fold.

As 2014 draws to an end, many may be wondering how the property market will fare in 2015. As the government has recently announced that the property cooling measures are not likely to ease in the near future, property analysts are expecting a 8 to 10 per cent decline. What will that mean for the overall market and will any particular property type stand out? Will the drop in private home prices mean a similar drop in HDB resale flat prices or will the demand for resale flats rise as more turn towards this less expensive option?