Increased supply beginning to affect private resale condo prices?

There has been talk about private non-landed home prices being affected by the onslaught of new completed homes flooding the market this year. Could the supply-glut effect be already taking hold of the market as resale completed condo prices fell 1 per cent in March?

Bentley ResidenceFebruary and January were positive months for the private resale property market as prices rose 0.5 and 0.2 per cent respectively. Though the fall in March may seem a bit of a letdown, an overall dip was registered in all market segments. The largest decrement was for the non-central regions, where a 1.4 per cent fall was recorded.

Property analysts are expecting a 3 per cent fall in private home prices this year as the supply of completed homes continue to be met by competition from new launches and competitive pricing from developer-sold projects. Resellers of completed or older resale condominium units may face increase competition from developers who are now pricing newly-launched units are more palatable pricing. Buyers have also become more selective and are more likely to pay only for location. The total debt servicing ratio (TDSR) framework also limits the amount they can loan, thus putting a bit of a dampener on investment- or upgrading-based property purchases.

As the middle of the year approaches quickly, the next quarter will likely show the market response more clearly as more new launches are planned. How will the consumers react to the competition for their attention. Will sales volume increase significantly or will prices fall in the heat of battle?

Prices of suburban properties dipping

Prices of new properties in the prime central districts have been rising, even as the market dulls. Suburban homes are feeling the strain put on the market by the influx of completed new homes this year.

The PanoramaBuyers seeking out properties in the suburbs tend to be more price-sensitive, and are often hampered by the total debt servicing ratio (TDSR) framework and the additional buyers’ stamp duty (ABSD), leading to higher competition from an expanding pool of stock for a shrinking pool of ready buyers. Prices at The Panorama in Ang Mo Kio have fell 9.7 per cent since its launch to $1,213 psf and similarly in Clementi, units at The Trilinq are now priced around $1,408 psf, almost 9 per cent lower than its launch price.

In comparison, buyers of properties in the prime central districts are more affluent and are able to afford the prices properties here demand. For example at Robin Residences, selling prices are now hovering at $2,371 psf, 2.4 per cent higher than its launch-price. Buyers of centrally located properties also have stronger holding power and less likely to sell unless the price is right.

RObin ResidencesThe price gap between suburban and central district homes have been widening. Last year, CCR (core central region) new-home price premiums were 81 per cent over those in the OCR (outside central region). As more OCR homes hit the secondary market this year, how will smaller investors handle the competition?

 

No luxury comfort for luxury property market

At $1,300 psf for a Cairnhill Plaza 4-bedder, it might be the lowest for a prime property in the middle of town in the last 10 years. As competition in the luxury property market heats up, owners and investors are finding themselves in a bit of a bind as prices dip and the buyers are few and far in between.

The Sail MarinaLeasing them out to fund mortgages have also proven to be increasingly difficult as the foreign workforce and pool of expatriates have shrunk due to job losses in the finance, oil and gas sectors. Combined number of secondary market losses registered in the core central region which consists of the prime districts of 9 to 11, the downtown core planning area and Sentosa Cove come up to 63 in the first quarter of this year alone.

As most of the expatriates looking for housing are now middle- or executive-level individuals with smaller housing budgets, smaller suburban properties in areas with regional business and commercial hubs are doing better than larger, high-end apartments in the prime or Central Business Districts (CBD). In fact, property analysts are now finding that more buyers are local Singaporeans who are purchasing a second or subsequent holiday home. As they are purchasing for occupation purposes, rental yields are less of a concern for them and are able to hold on to their purchases till a later date should they wish to sell.

843 new private homes sold in March

And that is a 8-month high, especially since the last new property launch was 4 months ago – The Poiz Residences in November 2015. That could be the glimmer of hope the local property market has been waiting for, though some analysts are still cautious about a obvious rebound as the government has tightened their grip on land supply this year.

WIsteria YishunThe rise in transactions of new units last month could be partly due to the pent up demand over the Chinese new year lull in February and the lack of new launches in the first 2 months of the year. Only 209 units were launched in February while the number more than tripled to 682 in March. The number of units sold doubled from 303 in February to 843 in March. The 2 new launches in March were Cairnhill Nine and The Wisteria.

Although the government has announced that they will be unlikely to ease up on the property cooling measures anytime soon, some buyers who may have been waiting in the sidelines for better deals may be coming to realise that prices will not be falling drastically this year and may have finally made the purchase move last month.

Overall, market sentiment is picking up and buyers are picking off bargains and affordable units before the winds change. New mass market suburban properties are capturing eyeballs and wallets.

Top reductions on Top-end London properties

As the number of new high-end luxury properties in London‘s prime and popular fringe districts such as Central London, Nine Elms and Earls Court climb, developers are feeling the pressure of a slump in demand and international investments.

London ApartmentDevelopers are finding that they now have to pursue overseas buyers more actively than before. They are also looking outside for cheaper development loans as there has been a 13 per cent fall in international buyers last year, and sales have fallen 19 per cent. Funding for some developments may be running into trouble and developers are looking at offering discounts for bulk purchases in order to secure monies for the construction process.

London Apartment2Higher property taxes have dulled some of the shine of high-end London apartments and land values have fell 1.1 per cent by the last quarter of 2015, compared to a 6.4 per cent gain in the earlier part of the year. What will this year hold for the industry? Property analysts are hoping developers find the funds they need to finance more extensive fringe projects. There are however doubts about whether bulk buyers willing to take up more than 100 units will be easy to find as most of these newer projects are not designed for the rental market.

Foreign buyers favour luxury properties in Singapore

Private apartments up to the size of 506 sq ft, more popularly known as shoebox apartments, have been having a hard time finding new owners as prices of completed units fell 1.1 per cent. However, non-central region private apartment prices rose 0.3 per cent in February and central region units have fared surprisingly well.

St Regis ResidencesThe recent sale of a $15million St. Regis Residences penthouse may have given the owner in a $3.3 million profit margin and given last month’s figures a boost despite the low sales volume. Overall, private property prices rose 0.4 per cent last month, following a 0.2 per cent rise in January. The luxury property market has not been in the best of health last year, but things may be taking a turn for the better.

Though property analysts are conservative about their predictions of a market turnaround this year, it is nevertheless a glimmer of light. With rising home prices in London and Hong Kong, foreign buyers are taking a second look at properties here in Singapore for investment purposes. Approximately 92 per cent of the sales and subsales transactions registered in the core central region come from foreign buyers.

Sturdee-ResidenceProperty investors with less holding power may be pushed to sell their units, in particular the smaller ones as rental prospects have dimmed, as oil, gas and marine sectors wobble.

Buangkok – The forgotten gem

When the Buangkok name is mentioned, many may remember the time when its namesake MRT station was in the news for being underused; some may still only think of it faintly as the backyard of other more mature townships such as Ang Mo Kio and Hougang. But Buangkok has since come into its own with connectivity on the North-east MRT line and as Sengkang and Punggol continues to grow.

The 616-unit Jewel @ Buangkok private condominium has taken root at this tranquil spot on the island and is just a 3-minute walk away from the Buangkok MRT station.

DnestSituated in between the Eastern and the Northern regions, it is just a short drive away on the Tampines Expressway (TPE) and Kallang-Paya Lebar Expresseway (KPE) from the Changi Business Park, planned Paya Lebar Business Hub and the Singapore EXPO. This makes the property a prime sweet spot for not only home-occupiers but also investors.

95 per cent of the property has been sold and its range of 3-bedders, dual key 4-bedders and penthouses will come into the private market this year. Most of the units boast a north-south orientation thus cutting out sun glare, and also come with smart storage systems and premium home interiors. Another similar property nearby with a 95 percent sales record is the d’Nest condominium which is expected to receive its TOP (temporary occupation permit) status next year.

China real estate’s real or false value?

The economic landscape in China has been nothing short of exciting lately, with quick-changing peaks and troughs. Following the recent stock market crash, investors are snapping up rapidly snapping up real estate, especially in Shenzhen and Shanghai. Investors are cashing out on their failing stocks and buying up real estate instead.

Shui On Land Wu HanPhoto credit: Shui On Land

The less-costly but equally major city of Shenzhen is leading the way for potentially similar activity in Shanghai, with property prices more than doubling in the last year. Properties are already considered expensive in the commercial and more cosmopolitan Shanghai, but even there, values are expected to rise 20 per cent. A new residential project in North-central Shanghai has recently launched to median prices of $1,600 psf, with a 1,800 sq ft unit  going for about $3.3 million. From the first-day sell-out response, saying that the buyers are biting is an understatement. Hong Kong developer Shui On Land is behind this project and will be launching the next phase in May this year, possibly at higher prices.

Taipingqiao1These actions however may be risky. A property bubble is growing and could burst if policies and economies are not managed efficiently. Some smaller counties are already struggling with increasing unsold inventory, with some townships reporting ‘ghost towns’ or developments which are severely undersold.