Winds of change in local property market

A decade or so ago, owning a second or third property might be the fastest way to secure your retirement funds or to even accumulate a tidy little kitty. Investment properties were considered a surefire way of earning additional income, but in the climate of today, property owners and investors have much more factors to consider and competition to battle against.

SunshinePlazaResidencesWith the rental market weakening, property agents are finding that it takes twice as long and also many more viewings before a property is successfully tenanted. And even then, for much less than before. Some property owners have had to reduce rents by almost half. Leaving the units empty are simply not an option for some investors as the rents go towards the mortgage or mortgages of their properties. It is after all better to have less help than none at all.

SerangoonHDBflatFor new investors looking to enter the market, the environment is a lot tougher than before. Considerations such as whether there is a large pool of HDB flats available for rental nearby, the long-term potential of the property, competition from other new launches or even within the same property, whether the local and global economy will affect businesses and commercial hubs nearby thus reducing the pool of foreign tenants, and so forth.

Before the market makes a complete recovery, a possibly lengthy period of stabilisation will ensue, despite the governments having made some allowances in the are of the property cooling curbs.

February’s dip in resale flat prices points to market stabilisation

February was a little slow for the resale HDB flat market as prices fell by 0.3% and transactions by 8.5%. This was following a promising start to the year. But industry experts are not too quick to dismiss the possibilities for the sector as the year moves ahead.

ClementiHDBflatThe slight dip last month was most likely due to the post Chinese New year lull which is a common occurence. Rather than being indicative of a falling resale flat market, the decline simply points at a stabilizing  market enironment. Though resale flat buyers paid about $2,000 less than market value across  the board, some HDB estates continued to clock more than 10 transactions and at prices above market value

In Bedok, some buyers paid $10,000 and more for their resale flats while in Clementi, some transactions closed at $4,000 above market value. That comes as no surprise as these are mature HDB estates where demand is high. There were also some recent private property launches in the vicinity, for example the Clement Canopy, which may have had some residual effect on the resale HDB  flat market.

Aerial view of HDB flats in Ang Mo Kio

Aerial view of HDB flats in Ang Mo Kio

There were however a couple of HDB towns which did not post as promising figures despite being popular locations for flat seekers. In Queenstown, the lowest below-market prices were clocked at $12,500,  followed by $10,000 in Ang Mo Kio. Prices of 3-room flats rose by 0.2% while executive flat prices fell by 1.7%. Overall, prices of resale flats in mature estates rose by 1.1%.

 

Budget 2017: Will higher CPF Housing grant lead to higher resale prices?

With a new budget comes a boost to resale HDB housing grants. In a Budget Statement last week, Minister for Finance, Mr Heng Swee Keat, announced an increase in CPF housing grant for first-timers applying for a resale flat.

Toa Payoh HDBThe increase is considerable, double that of the existing grant amounts in fact. First-timer families can now get up to $20,000 in grants, and first-timer singles up to $10,000. Previously grant amounts for both categories of applicants were at $10,000 and $5,000 respectively. Buyers are however worried that sellers may leverage on this fact and raise resale flat prices. Though it is possible that sellers may indirectly appropriate the differences in grant monies by raising selling prices, property analysts say the worry may be unfounded as the scale is still tilted towards buyers, at least for now.

And as the property curbs are unlikely to go anytime soon, plus many sellers and upgraders will have to let go of their flats within a specified period of time and many new public and private projects are reaching completion this and next year, raising the prices just to earn half the grant amount may mean the sellers are missing out on closing deals. And often in the property business, timing is everything.

SengkangHDBThe demand for resale flats is however on the rise, and the average period of time sellers take to find a buyer is narrowing to about 3 months. Prices may rise this year, but minimally, at a predicted 0.3 per cent. Sales volume however may rise as buyers begin to realise that prices are unlikely to fall any further. Industry experts foresee a 10 per cent increase in transaction volume, crossing the 22,000-unit mark.

 

Fresh Start Housing Scheme helps families start afresh

A new Housing board programme has been rolled out last December to help families own a HDB flat.

fresh-start-housing_long

Photo credit: Ministry of National Development

Aptly named the Fresh Start Housing Scheme, it is aimed at helping families who have once lived in subsidised housing and are now living in rental flats. They can now apply for 2-room flexi flats with shorter leases of 45 to 65 years, which means they pay less than the usual 99-year leasehold HDB flats secured directly from the housing board.

These will be a boost for lower-income families or those wanting to move on and up from the rental schemes. But as these rare 2-room flexi units are also made available to singles and senior citizens, they are one of the most popular unit types in the board’s latest BTO (build-to-order) sales launch. 713 such 2-room units were put up for ballot and the subscription rate was almost four times that with 2,894 applicants. First-time home buyers are also allowed to apply for grants of up to $35,000.

PunggolBTOFlat

Photo credit: HDB

There are however clauses in the Fresh Start Housing Scheme that limit qualifying applicants. Households applying under this scheme must have at least 1 citizen parent, 1 citizen child under the age of 16 and at least 1 family member must have had a stable employment for the last 12 months. The Ministry of Social and Family Development will also need to assess applicants and they must not have accumulated more than 3 months in arrears on their rental units.

New Tanah Merah condominium show flat draws thousands

Grandeur Park Residences premiered its show flat to a grand crowd last weekend as they thronged the Tanah Merah site in all eagerness. It will officially open for purchase on March 4.

GrandeurParkResidencesMost of the potential buyers were there to suss out the new 720-unit residential project situated near the Tanah Merah MRT station. Its proximity to the MRT station and location has no doubt attracted keen eyes. Most have spotted this new project for its rental and investment potential.

As more than half of the units in Grandeur Park Residences are one- and two-bedders, the more palatable quantum prices is a big draw for investors. Prices of the 2-bedroom apartments start from $700,000. Though the developers expected a big crowd at the launch of the show flat, the response has been overwhelming and is indeed a positive sign.

ParkPlaceResidencesThere has been glimmers of hope in the resale flat and rental markets just within the first month of 2017. The new condominium market has also been faring well even before the start of the year. And there will be at least 2 other major launches coming up in the months ahead, such as Seaside Residences in Siglap and Park Place Residences in Paya Lebar. Thus even though analysts are hesitant about calling it a good year for the market, consumer confidence is once again building up.

Resale HDB flat prices dip in January

Though resale HDB flat prices fell by 0.3 per cent in January and is 0.1 per cent lower in comparison with the same month last year, industry players remain confident of a stabilising market for the rest of the year.

PunggolHDBFlatResale flat prices have already fallen 11.2 per cent since its peak in 2013, though prior to that, prices have already risen considerably within 3 years. Straining from the continued price decline were the 5-room and executive flats segments, in which prices rose 0.4 and 0.9 per cent respectively. And again moving in the opposite direction, while 3-room and 4-room flat prices were expected to remain mostly flat, they have fallen 0.6 and 0.5 per cent respectively.

Resale flat prices in mature estates also fell 0.7 per cent, which comes as a little of a surprise since they have always maintained their demand despite falling numbers. Could the fall be due to the government ramping up the supply of new build-to-order (BTO) flats in mature estates over the past few years? Possibly. The trickle-down effect works just as well in both private and public property sectors.

BellewatersECAs the price gaps between private and public homes close, the pool of options for property buyers becomes bigger and while some HDB owners are holding on to their units in wait of better times, some may be forced to sell as they move on to their new BTO units or to private properties they are upgrading to. The increase in resale units may put some pressure on prices and sales volume. Already the volume of resale units have fallen 13.9 per cent from last December. Tampines and Geylang registered the highest number of resale transactions closed with above-market prices of $4000 and $5,500 respectively.

 

Resale HDB flat market’s continued stabilisation

For 2 consecutive years now, the sales volume of resale HDB flats have been on the rise. Since 2014, the number of transactions recorded for resale HDB flats have been increasing, from 17,318 in 2014 to 19,306 in 2015 and then 20,813 last year.

ToaPayohHDBflatResale flat prices are showing signs of stabilisation, with only a 0.1 per cent fall in 2016 from the year before. Though last quarter’s transaction figures fell 9.1 per cent, it could be due to the usual year-end lull as most were away for the school holidays. Akin to buyers’ sentiments and reactions in the private property market, HDB flat buyers have also been increasingly keen on closing deals as prices have been falling steadily since 2013. Most consider the market currently nearing or at the bottom of the property cycle and are thus more confident or willing to make the purchase at what they consider lowest-possible prices.

Despite the government ramping up supply of new BTO (build-to-order) flats for young couples and families, even including singles in their bigger scheme of things by providing them the option to purchase 2-room units directly from HDB instead of previously restricting them to only units in the resale market, there are still those who will require a unit sooner rather than later or do not quite qualify for new flats. These buyers will be the ones who prop up the market, though with the current cooling measures still in place, prices are unlikely to rebound anytime soon.

ClementiHDBflatProperty analysts are however hopeful that the number of resale flats transacted this year will be closer to the 21,000 to 23,000 mark. Resale prices have fallen to a level at which young couple and families find attractive or affordable enough to commit. A large number of HDB flats and suburban condominiums will also reach completion this year, which could mean more HDB upgraders will be looking to sell their existing flat in the resale market. And as rents are expected to fall as well, for the same reasons, the most optimistic outlook could be a 1 to 2 per cent price increase by end 2017.