Tenants calling the shots

Tenants are now calling the shots in the private apartment rental market. From lower rental prices and shorter leases to property renovations, some are even demanding specific furniture, new utensils and linen.

SeaHorizonEC

Photo: Sea Horizon executive condominium in Pasir Ris

Property rental prices have been coming down, especially as property prices have fallen over the last few years, and supply have increased substantially. Landlords are now finding it harder to find tenants willing to sign the standard 2-year leases which were commonplace in the past. Now most tenants are asking for shorter leases of 6 months as they know they are able to secure another place at a cheaper price should they wish to do so after the lease period. Private property rents have fallen 4.6 per cent in 2015, with rents in the outside central region (OCR) feeling the heat more with a 5.6 per cent fall. Rental prices of city fringe properties fell 4.9 per cent.

Property experts are expecting a 9 to 10 per cent vacancy rate this year, with rental prices falling 8 per cent. There will be approximately 26,467 new private property and executive condominium units made available this year, pushing supply up to an record high. Coupled with the authorities clamping down on immigration and a weak global economy, the prospects may seem a little dim. With investors and landlords not able to secure rental yields, the market may see an influx of units being sold; mortgage auctions may also find themselves having quite a few more units at hand.

Lull in private home prices

Despite a projected lull in local private home prices this year, interest in Singapore’s property market remains steady as prime residential property prices are still 165 per cent and 92 per cent lower than those in Hong Kong and London respectively.

 Photo credit: Singapore Tourism Board

So despite property analysts predicting a 5 to 10 per cent fall in prime and mass market private property prices this year, the local property market’s core remains strong. 2010’s property cooling measures may have kept property prices 17 per cent lower than what it could have been. Private home prices have fallen 4 per cent last year, following a 3.7 per cent fall in 2014. In the luxury home market, prices have fallen 20 per cent since the Additional Buyers’ Stamp Duty (ABSD) was implemented in 2011.

China’s recent growth slump, plunging oil prices, the Federal Reserve interest rate hike and a general sense of a global recession looming, might consequently affect the property markets around the world. Businesses may reconsider their expansion plans, which could mean a fall in demand for office spaces and commercial properties. This in turn may affect the number of expatriates entering the country, which may also affect rental prices.

This year could prove tough for investors and property sellers, but not without glimpses of hope. 2016 may be the year to hang-in-there, but industry experts are expecting 2017 to take a turn for the better.

Home prices along Downtown Line go to town

As expected, the newly completed Downtown MRT stations have brought much cheer not only the commuters but also to owners of properties in their vicinities.

The SkywoodsPhoto credit: Skywoods.com.sg

Since the Downtown Line began operating some of its stations last December, prices of properties near these stations have already seen an increase in interest, units sold and also rental prices. Private apartment prices have risen from $1,523 psf to $1,592 in the last quarter, up 4.5 per cent from the previous quarter. Out of the 18 stations now operating include long-awaited ones along Bukit Timah and Upper Bukit Timah such as Tan Kah Kee, King Albert Park, Sixth Avenue, Beauty World, Cashew, Hillview and also Bugis, Little India and Rochor stations along Rochor Canal and Sungei Road.

The price increase can be observed at private apartment projects such as Eco Sanctuary, where 9 per cent more units were sold by December. The development is now 91 per cent sold. Kingsford Hillview Peak condominium also saw a 3 per cent increase in sales and The Skywoods almost doubled their in the number of units sold.

With the effect MRT stations have on property prices, it would not be surprising to find prices of homes along upcoming Downtown and latest Thomson-East Coast line appreciate in the near future.

US rates hike’s effect on Singapore’s property industry?

The United States Federal Reserve recently announced a 0.25 per cent hike in interest rates, its first increase since 2006. Though it may affect the Singapore interbank offered rate (Sibor), property analysts are not too worried about a sudden or sharp effect on the local property market.

Aeropolis Indonesia propertyPhoto: Aeropolis in Tangerang, Indonesia.

Though interest rates will indeed increase come 2016, the rise may not be as sharp as expected, especially since the SingDollar has been gradually weakening against the greenback. The economy in general may be more subdued as household earnings are deflected to pay of debts and loans, but the Monetary Authority of Singapore (MAS) has indicated it will take a more prudent stance in managing the local economy and inflation. As most Asian currencies are expected to weaken against the US dollar, it may be worth considering a redirection of focus to regional properties instead.

Property buyers with home loans and mortgages pegged to the Sibor may see a rise in their monthly mortgage payments, though the increase may be gradual. Analysts are expecting the Sibor to reach 2 per cent by end of next year and the more volatile Swap offer rate (SOR) may rise to 2.3 per cent. Currently the 6-month Sibor is at 1.18900 while the SOR was at 1.59358. While most buyers count on rental yields covering their property loans, the more worrisome trend for next year might be a competitive rental market as more homes reach completion and enter the market.

Lower property tax for 8 in 10 home owners

8 in 10 private home owners and up to 80% of those who own a HDB flat will receive a christmas gift that keeps on giving. Due to the marked-down annual values of up to 260,000 homes, 80% of home owners will pay almost 3 to 20 per cent less property tax in 2016, according to the Inland Revenue Authority of Singapore (IRAS). The owners of 380,000 four-room HDB flats, 250,000 five-room HDB flats and 65,000 ECs (executive flats) will also see their taxes greatly reduced; some may not even have to pay any property taxes next year.

FOresta Mount Faber

Photo: The Foresta @ Mount Faber

Considering the IRAS has received $4 billion in property taxes in the 12 months leading up to March 31, it may be a small dent, but to the home owners, it may be truly happy news. As residential rents have been on the decline for sometime now, and with the expected supply boom next year, property owners may be facing some struggles when the onslaught of new private homes and BTO flats enter the market in 2016. Some of the effects can already be seen in the market in the latter half of 2015.

As property values are calculated based on the rental value of similar properties in the vicinity of a said property, the falling rental rates have no doubt been part of the reason for the tax cuts. Rents for private homes have fallen 3.3 per cent this year. Though a progressive tax system has already been implemented last year, with home owners who are living in their properties not having to pay taxes for the first $8,000 of their property’s annual value, this readjustment will help them save even more.

 

Downtown Line 2 – 12 stations bring buzz to prime districts

The Downtown line is having an open house this coming weekend on December 5, and with 12 new DTL2 (Downtown Line 2) stations commencing operations from December 27, travel across the island will now take half the time it used to. Spanning Bukit Panjang and Rochor, with stations such as Cashew, Hillview, Beauty World, King Albert Park, Tan Kah Kee, Sixth Avenue, Botanic Gardens, Stevens, Newton and Little India in between, the new stations and train service may just bring some year-end cheer to home and business owners in their vicinity.

GoodwoodResidences

Photo: Goodwood Residences

Not only do they potentially bring a buzz to businesses nearby, residential properties may also find an appreciation in sale and lease value. DTL2 runs through most of Hillview, Upper Bukit Timah and Bukit Timah, where the prime district of 10 stands. Properties along this stretch may see a rise on the already-high prices as the only public transport plying this route used to be the buses. Traffic jams are more than a dime a dozen, especially during peak hours and also when during the afternoons when schools are let out.

Downtown Line RochorPhoto credit: Land Transport Authority (LTA). Rochor Downtown Line Station.

Private properties along these 2 very long stretch include Hillbrooks, Springs Grove, Robin Residences, Stevens Suites and the newer Goodwood Residences, Three Balmoral, Hills TwoOne. Further up near the Cashew station are residential projects such as Cashew Villas and Cashew Crescent Terraces.

The rest of the Downtown Line, 16 stations of DTL3, are expected to be up and running by 2017.

More for less – Smaller condo apartments

With the rising prices of land plots sold under the Government Land Sales programme and with developers taking into consideration how the property cooling measures have affected buyers’ purchasing power, private apartment sizes have been diminishing since 2010.

LakevillePhoto: Lakeville at Jurong West

More apparent in units in the city fringes, average sizes have shrunk from 1,051 to 810 sq ft. And in the suburbs, apartment sizes went from 878 sq ft to 811 sq ft; though the average sizes from new projects actually dropped from 1, 113 sq ft in 2006 to 667 sq ft in 2011 but rose again to 928 sq ft in 2014.

In 2012, the Urban Redevelopment Authority (URA) put in place guidelines for the maximum number of units for condominium developments outside of the central area. Developers have since noticed that buyers are more sensitive to the total quantum price of a unit rather than per unit prices, especially since the implementation of loan curbs such as the Additional Buyers’ Stamp Duty (ABSD) and Total Debt Servicing Ratio (TDSR), hence maximising the land area and total number of units would be the best way to go.

Symphony SUitesPhoto: Symphony Suites

There are some residential projects which chose to follow their own path however, including Lakeville and Symphony Suites. But as the population continues to grow, it seems that unit sizes will only continue to diminish. Resale units may then have an edge over the smaller-sized newer units, provided pricing is equally competitive when time comes.

Upper Thomson – Property Hot Spot

Ever since the up-and-coming Thomson-East Coast MRT Line was announced, a number of new properties along the upper thomson stretch have been launched to good, if not resounding, response.

New residential developments which will be ready within the next few years include Thomson Grand, Thomson Three and now, Thomson Impressions. These are all situated within walking distance of the Bright Hill and Upper Thomson stations. Units launched and priced under $1 million have almost all been snapped up as property analysts hint at a possible million dollar sweet spot for most buyers and investors.

Thomson Three 1Photo: Thomson Three

Smaller units such as one- and two-bedders were particularly popular. At Thomson Impressions, one-bedders start at $670,000 and two-bedders $980,000. Apartment sizes range from 68 to 71 sq m for the two-bedroom apartments, comparable to sizes of three-room HDB flats. Thomson Impressions is made up of 100 one-bedders, 72 two-bedders, 106 three-bedders plus 5 penthouses and 5 strata-landed homes.

Prices are fairly affordable, especially for HDB upgrades who typically go for private properties below $1.2 million. Previously, units at Thomson Three which were priced at around $1,400 psf, sold quickly as well. There are currently only 8 units left. Smaller projects with under 300 units tend to sell well, especially if the location is prime and are near a number of good schools. Ai Tong primary school, Catholic High School, St. Nicholas Girls’ School, Raffle Instituition are all within the district or nearby towns.

Compared to larger mass market projects, these smaller developments also have the advantage of exclusivity, and much lower competition in terms of resale and leasing.

The 19-storey Thomson Impression is situated in Lorong Puntong and is expected to be completed by 2019.