August shows fluctuations in property rental market


OneDusanIn July, private property rentals have fallen 0.3 per cent, and now August has reflected a further 0.4 per cent drop. The number of new units entering the market no doubt has made competition tougher. Most of the fall in prices were for properties in the city centre. Rental prices of city fringe units fared better, with a 0.8 per cent rise. Overall, the number of units rented out decreased slightly compared to the month before, but rose 13.8 per cent in a year-on-year comparison.

What does the future hold for the residential rental market? 2016 seems to point towards a further influx of new properties. It used to be normal to rely on rental yields from one property to fund mortgages on another, but now the investment path may not be as easy. Spotting the right investment opportunity would take practice and a lot of market research, though there are advice out there to be had. Attending regular property seminars and talks will help you gain useful insights to what’s available out there and the potential of differing property options.

HDBrentalThe market is currently seeing a circular migration of tenants and they move from property to property in search of better rental rates. But this ensures a fairly stable rental volume level, though rental leases favoured now are the shorter 12-month ones as opposed to previous 24-month norms.

While the private property rental market faces strong competition, the HDB rental market will maintain a strong showing as rental rates are more palatable and has a strong tenant base.

Resale private property prices inch up

Positive news for the resale non-landed private property front as prices inched up slightly by 0.2 per cent last month. Though not a massive leap, any shifts in the right direction is a good sign indeed.

Archipelago private condominium project in Bedok.

Properties in the fringe of the city in particular had a good showing with a 7.1 per cent increase from a year ago. This is quite impressive considering prices have fallen 6.2 per cent in the last year for units in the central region and 2.9 per cent in the suburbs. The year-end festivities usually mean a slight slow-down in the property market, but between then and after the Hungry Ghost Festival, a number of new property launches are expected to help buoy the resale property market. Some new launches include Principal Garden in Prince Charles Crescent and Thomson Impressions in Sin Ming.

A recent change in immigration policies announced by the Ministry of Manpower in July may affect the demand for investment properties and rental units. The minimum monthly salary ceiling for Employment Pass (EP) holders who are bringing their families with them will be raised to $5,000 from $4,000. This may deter existing EP holders from following through with their plans or potential EP holders looking to relocate. However, this may only mean a dip in demand for larger units. Could smaller studio or one- and two-bedder units continue to benefit from the change?



Competition heats up in suburban rental market

As the number of new condominiums reaching completion in the suburbs increase, more owners and landlords are feeling the heat of the competition, especially if many units within the same establishment are in the market for tenants.

Tenants are becoming more savvy and picky with their rental choices, and are more aware of the choices and rental prices available. Though rents are not dipping anytime yet, competition may eventually push it downwards. Older resale condominium developments may also feel the squeeze more as proximity no longer plays a part in differentiating rental prices. When placed near each other, newer private apartment units will command higher prices in comparison, as their facilities are newer and may need lesser maintenance.

WaterfallGardensThe size of the property will then come into play. Smaller suburban developments without amenities at the scale at which larger establishments offer may lose out slightly. At D’Leedon for example, rental prices were at a monthly median of $4, 288 whereas at the nearby older Waterfall Gardens, median prices were at $8,600 per month. That could however be due to the larger apartment sizes of units at Waterfall Gardens, which does not have smaller studio or one-bedders.

With diminishing expatriate housing budgets, landlords may be looking at tenants with the spending power of $3,000 to $6,000 per month. But as centrally-located apartments have rental price tags closer to $10,000 per month, suburban units may still garner some attention. It may merely be a matter of how thinly spread out the tenant pool will be.

Investing in Sydney Properties

With the Singapore dollar strengthening against the Australian dollar, and with property prices and demand rising in the Australia, in particular Sydney, now could the the right time to jump onto the bandwagon. Especially as there is something coming up which could very well be worth buying into.
TheInfinitySydney_1Photo credit: Crown Group Holdings

A new residential-cum-hotel project at the corner of Bourke Street and Botany Road, helmed by Crown Group Holdings will yield 75 hotel suites, and 326 luxury apartments ranging from 37 sq m one-bedders to 138 sq m three-bedroom units with prices starting at A$650,000. Considering that is about the price of a four or five-room resale HDB flat in Singapore, the prestigious address with potential of appreciation and rental profits could be well worth its every inch.

Named The Infinity, this spanking new 20-storey project is situated in central Sydney, within the Green Square Urban Renewal Area. Designed by Koichi Takada Architects, it has clinched the Urban Development Institute of Australia New South Wales Concept Design award last year. Aside from the hotel and residential units, it will also feature a 1,180 sq m open-air garden plaza and a myriad of retail outlets and eateries.

TheInfinitySYdney_2Photo credit: Crown Group Holdings

Its prime location near Sydney’s Central Business District and universities, will no doubt raise its market value but quite a few points. To be completed by 2019, it will also be situated near the Green Square train station. Consdiering Sydney’s town planning has brought quite a bit of day and night life to the town centres and CBD, apartments in town have always been popular fodder for investors.

Exact prices of the apartments will be realised on 29 August.

Shoebox apartments – Supply over demand?

Shoebox apartments – affordable total quantum price, relatively easy to rent and maintain, limited numbers. That used to be the case when these small units were first marketed a couple of years ago. But as developers caught onto the small apartments trend and churned out more of these units, their numbers have increased significantly.

Parc Centros private condominium on Punggol Walk.

Parc Centros private condominium on Punggol Walk.

By 2017, the number of these shoebox apartments with floor area of approximately 500 sq ft, will rise by another 700. Instead of being mostly concentrated in the city and prime districts, they will now be in the Hougang, Punggol and Sengkang areas in residential projects such as A Treasure Trove, Bartley Residences, The Promenade@Pelikat, Parc Centros, River Isles, Jewel@Buangkok and La Fiesta.

Expatriates are usually keen on renting out properties near their workplace, usually near the Central Business District. But as businesses are moving out into the various regional commercial hubs, so may their search for rental properties. What may however be deterring them from renting out these small studio apartments could be the rental prices.

Rental prices of small studio apartment are now at $2,000 to $2,200 per month, down from $2,600 in 2013. These prices are now nearing that of renting out an entire HDB flat, which could prove to draw tenants away from the private property rental market. Could this then in turn increase the demand for resale HDB flat?

Resale property prices slide further

The private property market seems to be going the way property analysts have predicted in the beginning of the year. Over the last 6 months, prices of completed private property have fallen 1.9%. The steepest fall was in the beginning of 2014, at 3.7%. Though the decline has continued, the fall has been lighter in the quarters following.

Maysprings condoSince the implementation of the Total Debt Servicing Ratio (TDSR) in June of 2013, property prices have fallen at varying speeds over the past 2 years. A total of 42,606 new homes are expected to be ready for occupation within these couple of years and up to 96 per cent of the land sold this year are expected for future non-landed homes. It may become a tussle for prices and buyers, between new and resale properties.

As rental demand also continues to dip, prospects for the property market seems to have dimmed slightly, though select properties will still hold potential. Property experts have explained that the dip in prices in the resale market may have been due to the ability of individual to be flexible with prices. New properties which are being sold by developers have the means to stick to their guns in terms of pricing. The scale for rental supply and demand is likely to continue leaning towards the former.

Rental properties face price-pressure

Vacancy rates for private non-landed homes may reach 9.6 per cent by the end of this year, up 1.8 per cent from 7.8 per cent at the end of 2014. Since the beginning of 2013, rental rates have continually fallen on a monthly basis, with the exception of January this year. Property experts are expecting a further fall in rental prices in these next couple of years.

Duchess ResidencesProperty agents have also noticed that tenants are now signing shorter leases of 12 months as opposed to the usual 24 months. Tenants may be on the constant lookout for better deals are may change units more frequently. The number of new private homes have risen exponentially, especially as previously sold units reach completion and are readying themselves for occupation this and next year. This year alone, 21, 800 new units will be completed. That is almost 84 per cent higher than the 11,865 units in the last five years combined.

On the brighter side of things, the volume of rental transactions may remain steady as the tenant pool seems to stay constant albeit an increased likelihood of tenants making their rounds in the rental market. That may also mean a higher number of new leases being signed.

As long as the tenant pool remains the same, and the supply of new private homes continues to rise, the pressure on housing rental prices and eventually sale prices is here to stay.

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.