Who’s the most expensive of them all?

Hong Kong. When it comes to housing affordability. According to Demographia, a United States-based urban planning research unit, Hong Kong has emerged as one of the most expensive cities out of 367 metropolitan areas in 9 countries. Second on the list was Sydney, followed by Vancouver, Melbourne and Auckland. Singapore was 5th on the list.

Hong Kong property

Photo: Apartment in Viking Garden, Hong Kong 

In Hong Kong, median home prices are almost 19 times the median annual gross household income. It is the largest year-to-year increase in pricing over the 12 years in which the research was conducted. A small shoebox apartment below 500 sq ft would cost almost US$75,000 (or S$1.1million) in Hong Kong. That is almost double the price of such an apartment unit in Singapore. In the United States, only 9 metropolitan registered highly affordable housing prices, with San Jose, San Francisco, Los Angeles and San Diego being some of them. 14 other cities in the United States remained under the affordable level, with Buffalo, Cincinnati, Cleveland and Rochester tied in first place.

SF FlatPhoto: San Francisco apartment

With the US interest rates rising this year however, property analysts are expecting some change in the global property markets. Hong Kong’s property bubble may burst should the authorities do good on their promise to meet housing supply demand.

In Singapore, housing prices are 5 times that of the median annual gross household income. Although still considered ‘severely unaffordable’ under Demographia’s rating scale, HDB has been making efforts in the last couple of years to increase supply and reduce demand for public housing. For now, the price of a new HDB flat is still $150,000 to $180,000 lesser than a resale unit in the same area.

 

2016 – Property cooling measures to stay

Remember those days of astounding COV (cash-over-valuation) prices? Those days may be but a shadow of the current market environment today. More than half of resale HDB flats sold now are selling at prices close to market value and prices are now comparable to those of 2011.

Tampines HDB flatPhoto: Resale HDB flat for sale in Tampines.

National Development Minister Lawrence Wong has however said that it may be too early to lift the property curbs, most of which were implemented in 2013, during the peak of the property market. Since then, HDB resale flat prices have fallen about 10 per cent, according to the HDB resale price index.

Some of the most impactful measures include the Additional Buyers’ Stamp Duty (ABSD) and Total Debt Servicing Ratio (TDSR) framework. For HDB loans, the mortgage servicing ratio was tightened to 30 per cent of the loan applicant’s gross income.

With the property cooling measures here to stay, this year’s resale flat prices may remain level, with some fluctuations should there be economic or interest rate changes. HDB’s announcement of their expected 18,000 new BTO units this year may dilute demand for resale HDB flats, though prices are not expected to fall much as most buyers will be those who do not wish to or are unable to wait 3 to 4 years for the new BTO flats to be built. The motivating factors for selling or buying a resale unit may be what lays the foundation for the final transacted price.

Suburban private home prices waver


Parc EleganceNovember saw a 0.6% fall in private home prices, pulled down mainly by falling figures in the shoebox apartments segment. These units sized below 506 sq ft fared 1.2 per cent better in October than in November.

Property analysts are expecting some selling action in the months ahead, particularly in the non-central suburban private home segment as the surge of completed units and increased interest rates may force the hand of investors who have overstretched themselves. However, the number of sellers may outweigh the number of buyers as competition toughens up.

Properties in the central regions or prime districts of 1 to 4 and 9 to 11 could have fared better as well, with a 4.5 per cent fall in prices in a year-on-year comparison. That is a drop of 13.1 per cent from the peak in May 2013. Industry players have reasoned that properties in the central regions are generally larger in size, which means they also have a higher total quantum price, which makes them harder to find buyers for. Foreign buyers are also expected to pay a 15 per cent ABSD (Additional Buyers’ Stamp Duty), which may have turned some investors off the Singapore property market.

The Boutiq Killiney

Photo: The Boutiq Killiney

As the target audience for the central and non-central regions are quite different, sellers and buyers alike may need to alter their expectations of the market in 2016. In the central regions, some sellers may be ready to let go of their properties as the economy slows, but prices are not expected to fall drastically as the owners usually have the holding power to hang on to their properties till the price is right. In the non-central regions however, where owners and buyers are usually salaried workers, pricing may be more dependent on external forces such as the overall rate of economic growth, employment and mortgage rates, rental potential and debt ratios.

Private property market- Volume versus price

Stock of unsold private property units have been falling. At 25 per cent lower this year as compared to 2013, the improving take up rates could be chalked up to pent-up demand from buyers and lowering property prices.

Sol AcresPhoto: Sol Acres Executive Condominium

But the question remains, could sellers and investors expect a quick turnaround next year with profits and rental yields increasing? Resale property prices have dropped 6 to 11 per cent since 2013 and while sales volume has risen, the property rental market remains quiet. In fact, rents have softened this year and with the impending boom in supply of completed residential units next year (including executive condominiums or ECs and HDB flats), the rental market may be facing competition that’s tougher than before.

There are currently more than 300 unsold units the executive condominium (EC) market in projects such as Sol Acres, The Criterion and The Terrace. Developers of these and other private projects with unsold stock might be pressured to move these units next year as some may face restrictions such as the Qualifying Certificate penalties and the Additional Buerys’ Stamp Duty (ABSD). The latter not only affects developers, but also buyers who are also further restrained by the Total Debt Servicing Ratio (TDSR).

The PanoramaPhoto: The Panorama

Prices of developer-sold new properties have already been on the decline this year. At The Panorama in Ang Mo Kio, prices fell fromr $1,343 psf to $1,226 psf within 10 months. Similarly in Sims Urban Oasis, prices have dropped $112 psf to $1,285 psf in 9 months.

2016 begins in less than a month, and everyone will be keeping a keen eye on the first quarter for the tone it sets for the year ahead.

$1.5 million sweet spot for private resale buyers

Singapore’s property market will be expecting some adjustments in the private resale non-landed sector as more completed units continue to enter the market next year. But prices have stabilised somewhat in the past couple of months after 5 months of consecutive decline.

Loft @ Nathan, one of the new property launches available to buyers.

Loft @ Nathan, one of the new property launches available to buyers.

Property analysts have realised that buyers remain highly sensitive to the total quantum price and they seem to have reached a sweet spot of $1.5 million. Smaller units are more susceptible to price changes as their numbers are on the rise, causing rental competition to be rather fierce. In October, a 0.1% value increase for private completed non-landed properties was registered by the NUS Singapore Residential Price Index. More buyers have been setting their sights on resale properties as developers largely cut back on the number of new launches in the second half of the year.

There were 247 more transactions registered this year as compared to the last and with a $750,000 increase in sales figures. There has also been a shift this year in the market’s focus, from new developer properties to resale properties. More buyers are own-occupiers who are looking for immediate housing needs, thus are more willing to pay for resale units.

Industry experts are expecting 2016 to bring more fluctuations as the market copes with new homes reaching completion, private homes and HDB flats included.

Melbourne’s Twin Peaks

As if the property scene in one of the loveliest Asia-Pacfic cities could not get more exciting enough, add towering twin 80-storey residential blocks and with almost 2,000 retailers in arm’s reach and there is buzz upon buzz.

QueensPlaceMelbourne‘s central business district (CBD) will be welcoming at least 819 new private apartments in just one tower alone of the 2-towered Queens Place, a landmark residential project right in the city centre atop Flagstaff Hill, the city’s highest point. Talk about cream of the crop.

Interspersed between residential units within the 80 floors of block 1, which has been launched in Stage One of the project, are commercial and retail spaces. With prices starting from A$429,000, there are a variety of units available including one-, two- and three-bedders, penthouses and sub-penthouses. Demand from local buyers have been positive and the project certainly presents itself well to overseas investors.

Photo credit: South East Property

This sparkling new gem also boasts amenities such as private lobbies, pool, spa, sauna, wine cellar, library, private gardens, private bars and dining rooms, and even poker and mahjong rooms. It’s prime location puts it within 2-minutes walk away from major shopping malls including Emporium, Myer, David Jones and Melbourne Central, and also the numerous offices nearby. Without doubt it would command considerable resale and rental yields especially with a rising Australian property market.

The project is marketed exclusively by South East Property in Singapore and Malaysia, in collaboration with Colliers International.

From East to West – What’s prompting Singaporean investors to invest in UK properties?

Northern_Warehouse_and_Beetham_Tower

Investment trends in 2015 have made for compelling analysis.

Uncertainty in global equities markets and political instability are just some of the reasons that have prompted many of the world’s investor community to reconsider their investment strategies this year.

Yet amid all of this change and upheaval has remained one asset that continues to generate global investment interest – UK property.

A weakening rand, for example, has triggered high numbers of investors in South Africa to get their money out of the country and diversify their portfolio with a British real estate acquisition.

And another region in which the UK market has seen significant levels of sentiment is Singapore. This year many investors have decided to hold off entering one of Asia’s most popular property markets, and instead invested in one of the highest performing in Europe. Such significant activity has prompted Select Property Group, the UK’s leading property investment company, to open an office in downtown Singapore, where they will be holding an exclusive grand opening on 25th November.

But why are investors in the region rushing to secure assets in a market 7,000 miles away?

Singapore – a 13-year slump with no end in sight

For many investors, patience has finally worn thin. Singapore’s property market has now been sliding for eight consecutive quarters, overwhelmed by the government cooling measures put in place in recent years to control what has become the continent’s second most expensive real estate market. With yields being swallowed and an outlook that predicts little market improvement, an alternative investment strategy is urgently sought.

What about the Singapore equities market?

Although it offers an alternative investment option, Singapore shares are also on the wane. The Straits Times Index has plummeted 18.6% since its peak in the middle of April this year.

Besides, it’s real estate that investors in Singapore have familiarised themselves with, thanks to historic capital growth of 83.7% in the last 10 years. But now house prices are experiencing slow residual declines and they cannot be offset by yields.

Property is still the answer, just not in Singapore.

So why has the UK now become the place investors want to own real estate?

High returns and a long track record of growth for international investors make British property an attractive proposition. In three decades UK residential real estate has driven better returns than gilts, equities and commercial property.

Instead of weathering the storm of the Singapore market, investors can take advantage of the security the UK offers, with its political and economic stability and returns in a strong currency.

Which UK markets are currently offering the highest growth?

Traditionally a nation of homeowners, Britain is currently undergoing a rental revolution. A preference for flexibility, as well as changing generational attitudes, means that by 2025, it’s estimated that over 50% of 20 to 39-year-olds in the UK will be renting their property.

As such, private rented sector (PRS) property is one of the must-have property assets in the UK right now. Cities such as Manchester have seen yield growth 13 times faster than London, as the demand for property in key regional markets is being met with low levels of supply.

Additionally, student property has been established as the UK’s number one asset in recent years. A product that experienced growth throughout each year of the global economic downturn, huge undersupplies of purpose-built student accommodation (PBSA) across the UK has created huge investment opportunities in a country with an international appeal for higher education.

Select Property Group will hold the exclusive grand opening of its new Singapore office on Thursday November 25th – and it wants you be part of it. Hear about the latest UK investment opportunities and find out why Select Property Group are the trusted UK property investment experts of investors in over 117 countries. To register and secure your place, follow this link.

Tri-factor sustaining Property market – Government, industry and home owners

As 2016 brings a slew of completed new homes into the property market, developers are concerned about what market restrictions and rising construction and project development costs will do to the industry.

Kallang Riverside

Photo: Kallang Riverside

Even as everyone understands that Singapore is a land-scarce country, and the costs of properties will never be unrealistically low, the current market sentiment seems to be one of wait-and-see. But property prices may never fall too far without affecting the quality of homes. Developers are already feeling the financial squeeze as land costs rise, along with regulatory fees for plans submissions and costs of construction, fittings and furnishings. On top of that, developers are also under the time pressure of selling all their units within a five-year period in order to avoid paying the Additional Buyers’ Stamp Duty. At the moment 3,000 units from the development of properties from land plots sold under the Government Land Sales Programme in 2012 remain unsold, they will reach their five-year deadline next year.

Thus as much as a home buyers may be waiting for even lower prices, new properties launched in the months or year ahead may not be able to lower their prices any further. Moving ahead, how the Government manages its land sales programme, and how developers manoeuvre around rising project development costs and market their products may be key to keeping the industry and ultimately the overall economy healthy and growing.