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?

Re-zoning Geylang – Fewer residential properties

At first instance, this proposal may not sound promising, but it may actually bring good news for owners of existing condominiums in Geylang. The Urban Redevelopment Authority (URA) has recently announced a re-zoning of residential areas in Geylang for commercial use.

Rezi3TwoWhile this means that there may not be as many private residential properties in the area, the value of those which have already been built may appreciate as offices and businesses eventually move into the area. This proposal by the URA could be seen as mainly to facilitate the balancing of residential and commercial activities in the district. The over-building of residential properties in the red-light district could have a reverse effect and introducing more commercial properties and maintaining a suitable amount of residential properties in the area may in turn increase the rental yields and value of properties in its proximity.

With Geylang’s prime location putting it close to the city centre, Aljunied MRT station and the Singapore Sports Hub, rental yields here are already 1.5 per cent higher than those in other districts. With the area mostly made up of smaller land parcels, the likely tenants would be boutique developers and small businesses, with the possibilities of niche eateries and shops.

Some residents have however raised concerns over this re-zoning move as more commercial spaces here may mean an increase in the illegal and disruptive activities normally associated with this infamous district. What are the pros and cons of purchasing property in Geylang and does one outweigh the other?

New condominiums not spared from 2014’s lull

The stream of new homes entering the market has been continuous and more will be coming our way in 2015, with up to 2,500 units within the next two months. Larger new residential projects ready for occupation soon include the Sims Urban Oasis and Northpark residences.

Sims Urban OasisThis sudden increase in supply may not necessary affect sales prices, but the number of transactions may drop as buyers hold out in wait of what the rest of the year brings. In the last month of 2014, sales were lacklustre, with the best seller being Lakeville condominium with 16 units sold. This is followed by 13 units sold at Rivertree Residences and 12 at The Panorama. All are suburban mass-market private homes. Even the executive condominium market slacked a little with only 128 units sold at the 747-unit The Terrace in Punggol.

But the later half of 2015 may hold some promise as property prices may have corrected by more than 10 per cent and property cooling measures may then be lifted. Sellers may find themselves having to lower prices as competition heats up and buyers wait out as long as they can. It is just a matter of waiting for that sweet spot to hit the markets.

Decline of home prices not reflective of cooling measures’ power

It all boils down to holding power. Of both buyers with their mortgages and home loans; and developers with their unsold units. Despite a year of seemingly repressed property market growth, the actual decline in home prices as a direct effect of the property cooling measures may not be as steep as it feels like. In fact, URA figures show only a 3.9 per cent drop in prices since Oct 1 of 2013 to 30 Sept of this year.

TheVermontCairnhillSince the property boom of 2009, home prices have increased 65 per cent till the end of 2013. Whereas the drop this year is a mere 4 per cent. Which means, property prices are still more than double of what they were before 2009.

Though the average total quantum price of homes may have dropped, the psf prices are maintained at a reasonable level as the main change comes from the diminishing property sizes. Though buyers’ affordability now ranges between $1million to $1.3 million, figures which have held steady for the past 5 years; the median sizes of new homes have fallen from 1, 195 sq ft in 2009 to 753 sq ft in 2014. This is a sure sign that developers are still holding on to their asking prices while giving less in terms of liveable space.

Resale homes are holding up better than new homes however, with a 3 per cent drop as compared to a 6 per cent drop of the latter. This is largely due to developers’ offers of discounts on unsold units. Examples of these can be seen at The Vermont At Cairnhill, and also at Sky Habitat, where more units were moved after a 10 to 15 per cent cut in prices.

Moving into the new year, property analysts are expecting sales volume of next year to be similar to 2014’s, though home prices are unlikely to experience a drastic drop. Rather, a gentle decline into a comfortable equilibrium is what most experts are prone to agree on.

The future of Singapore’s property market – Looking outwards or inwards?

The property industry experts are hoping that the Government will take crucial and timely steps to aid the country’s property and construction sector should trouble loom.

8scape Malaysia property

Photo: 8scape Residences in Malaysia.

Redas (Real Estate Developers’ Association of Singapore) president, Mr Chia Boon Kuah recently mentioned that the impact on the property sector could similarly transfer to an impact on the country’s overall economy. The vacancy moving forward is expected to hit 10 per cent as the number of new properties reach 68,000 in the next few years. Transaction volume has declined by half of last year from 18,000 to 9,000.

There were also talks about the languishing luxury property market here. The stricter measures and higher taxes may be reasons for wealthy investors looking elsewhere in the region for property investment opportunities and even draw Singaporeans away from investing within their own country.

However, with possible interest rates hikes and stimulus slowdown in the United States, interest in overseas property investment may be waning. As the local property market cools, and prices start coming down, some may also choose to take the wait-and-see stance, possibly holding their horses for a good future run in the local markets. How will the market fare in 2015 and will buyers be drawn to local or foreign properties?

Private home sales down in Q3

Despite recent new launches, private home sales remained lacklustre as the third quarter registered  lowest sales figures since 2008. Only 1,596 new homes were sold in the last 3 months, though 648 units were sold in August alone, signifying a plausible comeback.
 Tre ResidencesSome of the more popular residential properties were the newer ones such as Highline Residences, Seventy St Patrick’s, Lakeville, Eight Riversuites, and some new launches from projects such as The Panorama. As per previous years, post Hungry Ghost Festival meant home buyers were once again eager for new deals and were actively seeking property purchase opportunities.

Across the board, 6,030 private properties were sold in the first 3 quarters of the year, almost half that of the same period last year. Much of the decline was due to weakening demand in the primary market, which could be a result of the tightening home loan limits implemented in June 2013.

Upcoming launches of Sophia Hills, Tre Residences and Symphony Suites might bring renewed activity into the market and possibly close the year on a high. But most of the attention will be in the executive condominium (EC) market as the drought of new launches in this sector welcome new launches of Lake Life, Bellewoods and Bellewaters.

Lakeside Wonder

Things in the West are heating up, especially with the launch of a number of private residential properties, announcements of a new Jurong Lake Gardens, a new retail and commercial hub Jurong Gateway and new transport lines. It’s a whole new township blossoming.

Prices of properties at Lakeside, a largely residential district, has been on the rise, significantly more so since 2009. Lakeholmz condominium apartments were only priced at $440psf in 2003. In 2009 and 2010 respectively, relatively properties such as The Caspian and Lakefront Residences were already costing buyers $580 psf and $1, 020psf. That is almost double in just a year’s time.

LakevilleOne of the newer launches is the Lakeville condominium and current median prices of properties in the area range at $1, 300 psf. Over the past 12 months, prices have ranged between $706psf for older establishments such as Lakepoint condominium to $1,263 psf at Lakefront Residences.

The new malls, businesses and regional offices setting up shop in the area has also brought along with it a new flow of tenants. Thus rental prospects are promising, especially for newer properties. Rental prices above $3 psf and at least 10 leases are signed at each residential property per month.

With a new land parcel up for bids in December, buyers looking to enter the market in the west side of the country could possibly have something to look forward to.

CBD Living on the rise

Despite restrictions in the property market and decreasing sales in the private property sector, more buyers are looking to purchase apartments in the CBD (Central Business District).

Tanjong Pagar CentreLiving just a walk away from the office has its positives. But recent interest has dawned from the promise of change. New mixed-use developments such as GuocoLand’s Tanjong Pagar Centre, will bring live into the sleepy after-hours districts of Shenton way, Raffles Place and Tanjong Pagar and change the fact that CBD living often comes with its fair share of inconveniences such as not having schools, supermarkets or shopping centres which open beyond the normal office hours in the vicinity.

Tanjong Pagar Centre will feature Grade A office spaces, luxury serviced apartments – Clermont Residences and other commercial businesses. It will be linked to the Clermont Singapore Hotel. Just a little way off are other residential options – the Marina One residences. This project will go on sale later this year, and prices are expected to start at $2, 800 psf. There are other new private apartment developments in the pipeline, giving this city-nation a new meaning to city-living. Skysuites @ Anson, 76 Shenton and Altez, just to name a few of the many which have come up in the last 10 years.

76 ShentonWith news of the Southern Waterfront development under URA’s draft masterplan 2013, the area looks set to be booming with activity within the next decade. Considering the fact that rental yields now are already at 4 to 4.5 per cent, higher than the island-wide average of 3.8 per cent, it will be no wonder what the future will bring.