Buyers think property market cool-down is here to stay

Private property prices and sales have been cooling for the past few months, and the market sentiments are that the cool-down will continue into the next year. Almost 4 in 10 people think that property prices will continue to decline over the next 6 months, though young couples who are at the verge of moving into the private property market think that a rise in housing prices may still be possible.

SantoriniInstead of a drastic fall in property prices, what 2014 has seen is a stabilisation of prices. HDB flat prices started off the price-drop which began in the second half of 2013. The private property sector followed suit in the beginning of this year. The most hard-hitting cooling measure was the restrictive loan limit which meant it became harder to borrow money to purchase a property. Although this may have made private property prices fall slightly, prices of HDB flats have not fallen significantly enough and with it becoming harder to get a HDB or bank loan, buyers of resale flats may be priced out of the market.

Thus a valid question may be, is the price decline sufficient? Is the decline sector- specific and is owning a property in Singapore a feasible goal for most citizens? What else can the authorities do to ensure equal opportunities for all. As the country prepares itself for the next General Election, answers may come soon.

Private resale property woes

Have buyers of private non-landed properties decided to take a hiatus? November’s sales figures for private resale condominiums seem to indicate a widening gap between buyers’ and sellers’ price expectations.

With the tough loan limit still in place, the number of buyers for private properties have shrunk, much more so for resale units. Some buyers could be holding back as they wait for newer launches or are simply wary about jumping onto the bandwagon too early as industry analysts have predicted a tipping of the supply and demand scale in the next couple of years.

RIse OxleyResale properties in some districts have however fared better, some selling up to $80,000 above the valued property price. In the prime district 9, buyers have responded positively to properties in the Cairnhill, Killiney, Leonie HIll, Orchard and Oxley areas. And far out in the western district 22 comprising of Boon Lay, Jurong and Tuas, the average above-valuation price buyers have been willing to fork out was up to $30,000. At the fringe of the city, in district 11 of Chancery, Bukit Timah, Dunearn and Newton, prices went to approximately $15,000 above the market value.

So it seems that despite  announcements that properties in the city centre may be loosing its clout, the recent  numbers seem to indicate otherwise. How are the suburban resale sector responding to this shift? Are they shifting their preference to public housing options such as executive condominiums?

A whole new Sims

No, not the computer game. But Sims Drive. No longer will it be an address for offices, industrial buildings and warehouses. Come 2020, a new 1, 042 private residential project will bring a whole lot of life in the area.

Sims Drive GuocoLAndPhoto credit: GuocoLand.

The Urban Oasis private residential property development hopes to bring with it not only new residents, but hopefully more businesses and amenities. Some experts have likened the area to Tiong Bahru in its early days, and perhaps that might bring some “hip” factor into play. Currently, there are a couple of popular hangouts in the vicinity, Loysel’s Toy and Cafe Melba.

The project will be developed by GuocoLand and property analysts are expecting prices of units to be approximately $1, 200 to $1, 300 psf. The proximity of this plot of land to the Aljunied MRT station could draw potential home buyers and even investors are the units may cater to expatriates looking to live slightly out of the town centre or city fringe areas but with relative quiet and convenience.

Clermont ResidencesThinking ahead and differently from its previous projects such as Clermont Residence, Leedon Residence and Goodwood Residence, the developers are hoping to cater to different residential groups including singles, small families, upgraders and even those looking for a home office. Buyers can look forward to a variety of cluster homes, studio suites and even home office units.

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?

Marina Bay home sales show positive signs

Private home sales in the suburbs have been showing sign of strain as the increasing number of new completed condominium units compete for the increasingly limited number of buyers, which could be further limited due to loan limits, a downtown project seemed to be bucking the trend and pulling in sales in the luxury apartment sector.

Marina One Residences in the Marina Bay precinct secured half of the total number of home sales in October alone. But that could also be due to the fact that it was the only new launch in the month. 334 units of the 1,042-unit condominium were sold at the average selling price of $2,228 psf. However, sales were still lagging behind its initial preview launch when earlybird discounts were given, and sale prices hovered between $1,960 and $3,100 psf.

Marina ONe iprop watermarkDevelopers are finding it harder to attract the buying crowd and have found they are now more sensitive to pricing as it became more difficult to secure bank loans. Though the price fight is not evident yet, as buyers are still willing to fork out a considerable amount for properties in good locations, it may only be a matter of time before the cracks show. Especially since 2015 and 2016 will see an even bigger influx of completed private homes in the market.

For now, developers are focusing their efforts on selling remaining units at previously launched projects such as DUO Residences, Coco Palms and Lakeville condominium, thus holding back on new launches. Will this drive consumers towards other property types such as executive condominiums (ECs) and resale HDB flats or will they continue to seek better deals with the existing private property market?

Glimmer of hope for Private resale homes?

Although the total number of private resale homes sold were lower in October than September, prices have begun to rise slightly. According to latest data, non-landed private home prices rose 0.4 per cent in last month. In suburban districts often popular with buyers such as Bishan, Toa Payoh, Little India, Geylang and Queenstown, prices rose 0.6 per cent. Transactions and prices of prime district properties however remained quiet, falling in fact by 0.3 per cent.

Okio Residences in Balestier.

Okio Residences in Balestier.

Have overall property prices fallen sufficiently? And have they reached the lowest point of the property cycle? If so, how long will this low point last? Private property prices have been low for quite some time now, maintaining a steady level in terms of pricing and transaction volume for almost half a year. The government has said that they will not relax the cooling measures anytime soon, perhaps in fear of a huge and quick rebound which may bring prices up even higher than before the curbs were put in place. They could also be giving the measures a bit more time to sink in, to further bring down home prices and getting the industry and public used to these measures.

Property experts are expecting prices to decline even further in the short term. Would this be the best time to invest? And how would you go about investing? Is it best to move away from residential property into commercial property? Or are there certain property types with hidden long term value?

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.

Price reduction at the Lake Life

Just launched not long ago, the latest kid on the block – Lake Life EC in the Jurong Lake district is already offering units at prices lower than its initial estimation. Prior to its launch, the price tag was expected to hover between $880 to $890 psf. But it seems the average is now around $857psf.
lakelife ECThis could be due largely to the loan limits and subsidy caps for executive condominium buyers. Before the cooling measures went into full force last year, prices were much higher as buyers could apply for larger loan amounts. In comparison to its neighbouring private condominium, Lakeville, prices at the EC are much lower. Lakeville units are selling at the medina of $1, 328 psf. Considering the fact that ECs will eventually become private condominiums, which may mean a wider profit margin in the long run. Executive condominiums (ECs) are a hybrid between public and private housing, and buyers can sell them in the market after 5 years, and after 10 years, the development will become a private residential property.

Reacting to the smaller loans which buyers can now receive, developers are adjusting their strategies to offer units prices at a lower quantum prices as compared to lower psf prices. At the Lake Life, 84 per cent of the units have been priced below $1.1 million. A few townships away in Woodlands, and over in the north of the island, the launch of Bellewoods and Bellewaters executive condominiums this weekend may fan the EC fire and buyers will have more fodder for comparison. Prices, expected to be set between $750 to $820 psf, will be competitive. What will buyers be looking out for?