Move further away for better property deals

No longer are buyers limiting their sights to properties in familiar districts or estates. They are now willing to move from one end of the island to another if the draw of a property and its potential value in appreciation is strong enough.

This could be certainly be seen from the weekend turnout at the High Park Residences launch. Situated in Sengkang, a district only a few were willing to move to a decade ago, the Fernvale Road show suite of this latest mixed-use development in Sengkang was swarmed with interested buyers from all over Singapore; a sign that buyers are now more savvy about property investment and keen on purchasing properties with long-term goals in mind.

High Park 2Previously monopolised by public housing, Sengkang is slowly rising up as a popular new town with young couples and families. Private condominiums have also entered the district with gusto and buyers are snapping up units at resale and new private apartments in the area. Some of the properties in the area include Riverbank, La Fiesta and Rivertrees Residences.

High Park Residences will boast a mix of commercial, recreational and residential units. Out of their 1,390 units, 1,100 have been sold, with all the one-plus-study, bungalow and commercial units snapped up. With the Thanggam LRT station and Seletar Mall nearby, it’s no wonder this new kid on the block was popular with buyers.

Property auctions see more action

In light of the declining property market, more properties are finding themselves placed under the hammer at property auctions.

THeWaterlineLowered mortgage ratios, decreasing rental demand and increasing supply have all affected the property market. Most of the 180 units put up for auction in the 3 months up to 30 June have mostly been due to mortgagors defaulting on their mortgage payments. Industrial or residential properties alike have found it difficult to meet their mortgage payments if they were relying mainly on rents, especially as it has become harder to command leases at a level expected during the peak of the market.

Smaller private non-landed units such as studios or shoebox apartments were also facing some market pressure as their popularity waned. Supply of such units, or simply more private condominium apartments in general, has possibly exceeded demand and such units are now more commonplace. The next thing to budge would be rental and then sale prices.

Even as property loans become harder to secure, with the tight loan limits and hefty stamp duties implemented as part of the property cooling measures, the last hurdle that mortgagors have to cross would be the increasing interest rates.

For buyers and property investors, the proper might be a possible avenue to consider in their property search.

Singapore home prices down last quarter

Across the board, property prices have dipped again last quarter, but resale HDB flat prices may be stabilising. Following the first quarter decline of 1 per cent, resale HDB flat prices dipped only 0.4 per cent last quarter, possibly signifying a bottoming out of this market.

Optima condominium at Tanah Merah.

Optima condominium at Tanah Merah.

Nudged by the lowered mortgage servicing ratio cap from 35 to 30 per cent and reduction in the number of new BTO (build-to-order) and SBF (sale of balance flats) units, HDB resale flat prices have fallen for a few quarters now. Property analysts are expecting a stabilising of the market, or at least a rise in demand for resale units as HDB plans to increase the income ceiling for BTO flats, which may replenish the pool of potential resale HDB flat buyers.

Private home prices are however expected to fall further this year, especially as resale HDB flat prices have fallen so quickly the gap between private suburban homes and the former have widened. Some HDB upgraders may think twice about selling their HDB flat to purchase a private condominium unit and others may turn to resale flats instead of private homes. The expectation of a rush of new private apartment units to hit the market in the later half of this year may have also put a damper on market prices.

In the first quarter, private home prices fell 1 per cent, and the fall remained steady in the second quarter at 0.9 per cent. Moving ahead, prices of private non-landed homes are expected to fall 4 to 6 per cent by the end of the year.

 

Seller’s Stamp Duty packs a punch

The Total Debt Servicing Ratio (TDSR) and Additional Buyer’s Stamp Duty (ABSD) have been hogging property news for some time now, but the Seller’s Stamp Duty (SSD) has packed quite a punch of its own as well.

SeascapeThe Seller’s Stamp Duty (SSD) is seldom mentioned, but ever since its implementation in 2011 to curb property speculation, it has collected up to $70 million in non-landed property transactions. February 2015 marked the record high in SSD collected. One of the biggest losses for the seller was a unit at the Seascape condominium at Sentosa Cove which sold in May with a $5.43 million loss. Another unit at Four Seasons Park incurred a $2.64 million loss as well.

How does the SSD work? For properties purchased after 14 January 2011, should the property be sold within the first year, the SSD comes up to a whooping 16%, then lowered to 12%, 8 % and 4% after the second, third and fourth year. Should you sell after the fourth year, the SSD will no longer apply and you will be saved from having to pay any additional seller’s stamp duties.

Though tough, industry analysts consider the SSD an effective tool in curbing property “flipping” and consider it mild when compared to the ABSD which is levied on foreign home buyers and Singaporeans purchasing second and subsequent properties. These do not have a time limit, and unless the regulations are amended in future, will continue to take a fair bite out of profits.

Australian properties getting pricier

When the property cooling measures kicked in for the Singapore property industry, many investors turned to overseas properties. Properties in Australia, the United Kingdom and Malaysia were particularly favoured by Singaporean buyers as these were the more popular overseas education spots for local students.

Sydney Mosman FlatBut it seems the property prices in Australia are gaining momentum. For 10 quarters in a row, prices have risen, led in particular by a leap in home prices in Sydney. Across the board, prices have risen by 1.6 per cent but in Sydney, prices have been reported to grow by 13 per cent on a yearly basis. Australians are seeing this as a threat to the affordability of their city and once again broaches the topic of immigration.

Banks’ interest rates are however considerably lower now, down to 2 per cent in May this year. Has this allowed or enticed more to secure a loan and how will this eventually affect the industry when rates start rising and might there be a danger of the rehash of the United States’ property bubble here? The Australian authorities have already tightened the loopholes in their foreign investment policies and foreign property buyers now have to abide by stricter rules under the Australian Foreign Investment Review Board. Ultimately, it may be up to the policy makers to steer the market in a direction which balances on the knife edge between economic growth and nationalism.

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?

Smaller private homes popular with HDB Upgraders

Whether for occupation or investment, HDB dwellers moving into the private property market are setting their sights on smaller units below 100 sqm priced between $750,000 and $1.05 million. Median sizes of purchased non-landed homes have fallen to 85 sq m.

This could be a good indicator for developers and resale private condominium sellers of the pricing sweet spot in upcoming launches. Prices of completed transactions of non-landed homes have fallen 5.4 per cent. But private property owners who are purchasing within the market are snapping up bigger units of up to 110 sq m. This could be due to the fall in prices since 2013 and the affordable total quantum pricing.

Pollen&BleuThe number of foreign property buyers have also decreased slightly, with most now targeting luxury homes tagged above $5 million. In addition to Singapore’s political and economic stability, established infrastructure and education standards, value-for-money property options continue to draw foreign investors despite increased stamp duties.

As the market acclimatises itself to the new dynamics of the Total Debt Servicing Ratio (TDSR) framework, increased stamp duties and other property cooling measures, the buyers may gradually re-enter the market. With the promise of new launches coming up in then next few months, the numbers could see a turnaround soon.

Fewer new private property launches

Despite lower sales of new private home last month, the percentage of sales based on the number of units launched, was positive.

The lower sales figure was mainly due to the lack of new property launches. But the take-up rate of the 499 units launched was at a happy 128 per cent in May. The take-up rate was only 84 per cent in May this year, compared to 82 per cent in April 2014. Considering the 21 per cent fall in sales in the first 5 months of this year, the leap last month is a promising sign.

HighparkResidencesLeading the sales were suburban launches at Botanique at Bartley, Northpark Residences in Yishun and The Panorama in Ang Mo Kio. Median selling prices were $1,232 psf at The Panorama, $1,292 psf at Botanique at Bartley and $1,397 psf at Northpark Residences. Competitive pricing may have lowered prices on some newer launches and this could have attracted buyers back into the market. There were even reports of private funds or group of investors who have picked up 16 units at 111 Emerald Hill.

In the months ahead, the number of new property launches will remain low, which may in turn affect figures. But instead of looking at across-the-board figures, sussing out potential deals in previous launches which are re-launchning new units could be the way to get ahead of the pack. Upcoming launches to look forward to are Gramercy Park in Grange Road and High Park Residences in Fernvale.