Private resale property market to cruise on status quo

2016 proved to be a roller coaster year for the private home market, as prices fluctuated throughout the year but never quite settled into an upward swing. Price increases lasted hardly a quarter before turning the opposite direction and movements differed between regions as well.

SeletarParkResidencesAcross the board, resale private home prices rose 0.1 per cent. Most of the increase were for properties in the prime districts. Prices here rose 1.8 per cent while falling 0.9 per cent and 0.4 per cent in the city fringe and suburban districts respectively. Location continues to rule buyers’ decision-making process and prime district home prices remained stable despite the year-end lack of market activity.

As the rental market continues to wane and competition from completed properties put further pressure on rental prices, more private condominium unit owners may be pushed to sell this year as they come to the end of their 4-year holding period, after which they will have to foot their sellers’ stamp-duty bill. Buyers of resale units could have the upper hand when it comes to negotiations in these cases.

NathanResidencesThe number of private apartment units sold have been falling as well, with 484 units sold as compared to the 618 sold in November. Though the numbers are higher than the 453 units sold in December 2015, it is still a far cry from the 2,050 in April 2010 – a 76.3 per cent fall in fact. Property analysts are expecting prices and sales volume to maintain their current levels, though 2017 could be more a year of keeping the status quo than quick recovery.

Should the ABSD be removed?

ABSD – Additional Buyer’s Stamp Duty. Though mentioned less this year as other property cooling measures take over in significance, this nevertheless is a rather big hump investors have to get over should they wish to purchase properties for investment purposes.

Implemented in 2011 by the Monetary Authority of Singapore (MAS), it applies to foreign investors, Singapore PRs (permanent residents) purchasing their second and subsequent properties and Singaporeans purchasing their third and subsequent properties. This and other property cooling measures have successfully curbed the blossoming of a potential housing bubble which threatened to grow in 2009 and 2010. Combined with the Seller’s Stamp Duty (SSD), of up to 16 per cent, property speculation is significantly lower than before. The highly affluent are rarely affected but it has helped keep individuals relatively debt-free.

SantoriniAnother positive that came out of the previous couple of years of policy adjustments is more transparent industry practices. Developers are now required to submit weekly transaction data to the Controller of Housing, including incentives provided to buyers such as furniture vouchers, cash rebates, stamp fee or legal fees absorption and sales volume. That will help project a truer image of how the industry is fairing and what are the actual market prices and keep pricing more realistic.

The restrictive loan-to-value limit has perhaps affected the industry a tad more as it has brought prices down and maintained a level playing field. Whether the government has brought property prices to a level affordable for majority of Singaporeans is yet to be seen clearly, but with the recent election just over, all eyes could be on the new government to see what else they can or will do.

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.

Good Class Bungalows – Fewer sales but Prices Up

2, 400 in 39 gazetted areas. 49 sold in 2012. That’s the GCB real estate market for you.

Good class bungalow in Binjai Park.

Good class bungalow in Binjai Park.

Despite the property cooling measures implemented last year, the buyers are still biting and the prices remained resilient. Although the restrictions of a 16 per cent seller’s stamp duty and 60 per cent loan-to-value ratio may have stopped some in their tracks, the psf pricing of these rare commodities have risen 10 per cent to $1, 276 psf. The limited supplies definitely has a part to play. But perhaps as more are investing for the longer term and are more likely to be home occupiers, they may be willing to pay more. GCBs can be found in the Nassim, Dalvey, Tanglin, Binjai Park, Leedon Park, Ridout Road, and Chatsworth Road area.

The highest selling Good Class Bungalow in 2012 was one in Ridout Road which went for $60.6 million. Bought for $37 million by former goldman Sachs banker Thomas Chan, it changed hands in late March and now belongs to the Tecity Group which falls under the control of the family of the late OCBC Bank chairman Tan Chin Tuan. The second most expensive GCB sold, in Leednon Park, was for a much lower amount at $33 million. At 10, 800 sq ft, it holds six bedrooms and a pool.

The value of these bungalows seem only set to rise in then new year, though perhaps at a slower pace, depending on whether the weak market sentiment set about by the Europe debt crisis will take a turn for the better. Even as Singapore braces herself for slower growth this year, the global economy will affect Asia perhaps in a bigger way this year than the last.