2013 closed with weak demand for resale homes

Although a 0.1% rise was registered, the last quarter of last year saw a resale private home market which was relatively quiet, and where demand was low. But industry experts were none too ecstatic about the rise, with most recognizing that this might be a mere “technical rebound” which will not be sustained.

The Montana1Homes in the central region which sold above the median market prices could have accounted for this rise in numbers. A few units at The Montana in Jalan Mutiara for example, sold at $1, 832 to $2, 130 psf. The market prices were at an average of $1, 600 to $1, 800 psf. Another high-floor unit at The Orchard Residences also went at $4, 312 psf, above the $3,600 psf market price, possibly due to the rarity of the unit.

The largest dip came from the shoebox apartments sector. For these small apartments of less than 500 sq ft, which were the best sellers of earlier in the year, a 0.6 per cent drop could signify a saturation of the market with these types of units, and where rental demand may not yet make up for the sheer number in existence. As new non-landed residential developments flaunt their remaining units, resale units in the suburbs may be forced to lower seller expectations. Will 2013 purely be a buyers’ market?

Singapore Re-zoned for homes

In the next decade, be prepared for half a million new homes as land everywhere around the island will be re-zoned to home Singapore’s growing population. With plans for most of them to be in the Paya Lebar and Greater Southern Waterfront areas. In the Holland Village, Kampong Bugis and Marina South areas alone, 14, 500 new homes are expected to take root.

Tampiens North

In the greater scheme of things, 3 other major districts are expected to see a boom in residential properties, both public and private:

And planning even further ahead past 2030, the Paya Lebar area will welcome up to 500, 000 new homes as there are plans to move the Paya Lebar airbase to Changi East, yielding 800ha of land for re-zoning purposes.

BidadariThis shift of land use and rearrangement of population across the island is all part of a growing country’s historical progress, and depending very much on how Singapore’s economy performs in light of the global situation will determine other policies which may in turn affect the direction property growth takes. But in the meantime, prospects seem positive and for a quick investment turnaround, shoebox apartments in the suburbs are still considered one of the most profitable investments.

Resale home prices falling

As the supply of new homes continue to serve up options for property buyers, resale homes are somewhat relegated to the back seat as they compete to shine in the property market. The recent Singapore Residential Price Index (SRPI) numbers show that overall non-landed private home prices dropped by 2.1 per cent in October.

Industry experts are seeing an increasingly experienced pool of home buyers and investors who are much more price-sensitive than before. With so many options to compare between, buyers are often keen on newer establishments and tend to hold off looking for a resale unit, preferring instead to look out for new launches in the same area.

Sky Habitat condominium in Bishan.

Sky Habitat condominium in Bishan.

And with property developers offering competitive selling prices, new units are the bees knees especially for young families, professional couples and those looking for a good investment opportunity.  Sky Vue and Sky Habitat in Bishan are examples of recent new property launches which were offering discounted units and affordable and highly attractive prices. And should they be looking at similar resale units nearby, they are expecting them to be priced at least 20 per cent lower.

One other possible reason for the decline could be a weakening rental market. As immigration policies continue to tighten, and developers try all means to increase sales of their newer launches, resale homes might have to be satisfied being the wallflower for now.

Inflora in bloom

The new condominium on Flora Drive has bloomed. At its launch last Friday, 250 of its 396 units at The Inflora were already sold. That leaves only slightly more than one-third. Situated conveniently near the Changi Airport and also the Japanese Primary School and the new Singapore University of Technology and Design, it were the smaller apartments which flew off the shelves first.

This trend of investing in smaller units which have a more affordable quantum and higher target rate for rentals seem to continue well into the fourth quarter of the year. And because of the cap on the number smaller sized units, its rarity helps increase its salability as well as rental popularity.

The Inflora1At The Inflora, a one-bedder goes for around $400, 000. Very affordable as an initial foray into property investment. All of its 128 one-bedders and 136 two-bedders have be fully sold. The apartments ranged between 462 sq ft to 882 sq ft. In addition, there are 84 three-bedroom apartments of around 1, 033 to 1, 583 sq ft. Its four-bedders are a little smaller sized at 1, 302 to 1, 334 sq ft. Dual-key units which are also popular with families looking to purchase a unit for their own occupation area also available, with sizes ranging between 1, 463 to 1, 584 sq ft. The attractively low total prices, around $960 psf, have been the main draw.

Home buyers quick on their feet have leaped at the opportunity as the area is relatively undeveloped. But as more properties are built in the area, they are expecting prices to follow the same thread.

Smaller homes take the cake once more

Shoebox apartments are back on the popularity charts. Chalk it up to the new home loan restrictions.

Instead of entirely deterring home buyers, the new loan curbs have instead steered buyers towards cheaper home options, in order to fit the smaller loans made available. And these cheaper options often mean the smaller homes, such as shoebox units or one-bedders. Smaller homes mean lower total quantum costs in accordance to the total debt servicing ratio (TDSR) framework put out by the Monetary Authority of Singapore.

eCO condominium in Bedok. Its developer, Far East Organization, has offered a 2 per cent furniture voucher to take the edge off MAS' latest home loan ruling.

eCO condominium in Bedok.

The lack of new units could also have contributed to the herding of sales towards the secondary market. 481 private home units were sold in July compared to the 1,806 in June. But that’s not to say demand has dropped 73 per cent. Only 557 units were launched in July, thus the 481 sold would mean a 86 per cent success rate.

Overall resale prices have risen by 0.2 per cent in July, according to the Singapore Residential Price Index (SRPI). In June, there was a 0.4 per cent drop. But with the other recent shift in housing policy for PRs, the further rise in private property prices may be quick and sharp. How will the resale HDB flat market fare in comparison?

More aiming for two-bedroom apartments

This is on the back of the recent property cooling measures and declining rental demand. Most investors have previously gone for one-bedders for the affordability and rental potential. But as the landscape changes under the bent of most recent adjustments in the real estate industry, market demand is now for two-bedders instead. Buyers are opting for this property type as they provide a better option should they wish to live in them instead of merely relying on their property purchase for rental purposes. Borrowing restrictions could also have played a big part in the change in the direction demand blows.

Urban Vista at Tanah Merah.

Urban Vista at Tanah Merah.

Property developers have also began reducing the number of one-bedroom units within a private residential development. For most suburban projects, two and three-bedders could be the most popular and numbered units. In prime units however, due to space restrictions and the high psf prices, the take-up rate of one-bedders are still high.

In a number of private properties launched only this year, such as Urban Vista, D’Nest, The Trilinq and Novena Regency, two-bedroom apartments were selling faster than one-bedders. Property buyers are apparently now purchase homes rather than properties. Meaning owner-occupation takes priority over investment yields. Two-bedders also have a lower psf prices with a more affordable quantum. In the long run, two-bedders are deemed more prudent investments against a weaker rental market as compared to one-bedders which may be more susceptible to market downswings.

CosmoloftThe dip in interest for shoebox units also shows in the slowed sales of units at the newly launched 56-unit freehold condominium in Balestier, Cosmo Loft. According to Urban Redevelopment Authority’s data, only 4 units were sold since its launch in June this year. In the previous couple of years, shoebox units have been all the rage, with one out of seven units sold in 2011 being a shoebox flat. Some of the most popular developments with shoebox units were Spottiswoode 18, Skysuites@Anson and The Interweave.

Does this shift in dynamics an early indication of the possible turning point of the Singapore property market? Is the bubble, if it could be called one, about to burst?

City fringe Condominiums – Just close enough

Close enough to the city. Close enough to command considerable prices.

Districts 11 and 12, enveloping the Chancery, Bukit Timah, Dunearn Road and Newton areas is near MRT stations such as Newton and Botanic Gardens. The Newton Food Centre is just a short walk away and so is the heart of Singapore’s shopping district, Orchard road.

Freehold Lincoln Suites at Novena

Freehold Lincoln Suites at Novena

High-rise properties in this area have been selling well over the first half of the year. In particular developments which are medium-sized, those with 200 or lesser units in total. The 175-unit freehold Lincoln Suites is one such condominium. Located just behind United Square Shopping Centre, it has had one of the highest selling prices of $2,381 psf. The project has one-, two- and three-bedders available. In 2012, some of its units registered the highest psf pricing for shoebox apartments. A 484 sq ft studio apartment was sold at $1.43 million of $2,900 psf.

Other popular properties in the area are Rochelle at Newton and Trevista. Rochelle at Newton is closer to the city centre location than Trevista which is situated in Toa Payoh, thus asking prices are a tad higher at an average of $1,650 psf. In the district 12 Trevista, prices are set at $1, 515 psf. Although it is not as near to the central region, its proximity to the Braddell MRT station and schools such as the Convent of the Holy Infant Jesus are reasons enough to set its mark high up on the pricing charts.

In the Newton, Watten Estate and Novena area, new properties are being built and many older establishments are still standing. One wonders if there is still space for development and how much more or how much longer could prices stand to rise. Has a saturation point been reached?

The case of the shrinking condominiums

Unit size, that is. It used to be that a one-bedder in 2008 measured an average of 678 to 947 sq ft. From 2010, they measured 538 to 678 sq ft. When the minimum becomes the maximum, it may be the sign of times.

 

One of the latest new properties offered - Natura condominium at Hillview Terrace.

Natura condominium at Hillview Terrace.

Property developers have been shrinking condominium sizes to make them fit into the pockets of buyers. And these are not restricted by area, across the board, homes are getting smaller. Shoebox apartments have been the focus these past couple of years, but now, it’s not only the studio apartments which are put under the microscope. Two and three-bedroom units have also been getting the slice. For example, a three-bedder in Natura at Hillview Terrace measures 635 sq ft, that’s even smaller than the smallest one-bedder unit launched in 2008. And before 2008, the same would have gotten you 1,500 sq ft.

As Singapore’s population rises, the challenge to contain all in livable conditions fall not only in the hands of the Government, but also on private developers. High land costs, labour costs, material costs have all contributed to the situation. It’s either higher prices or smaller spaces. Or both. But does this mean buyers now pay less? As competition increase, property developers find themselves fighting for the same crowd of buyers, and trying to put out products which fit into their price points.

Midtown Condominium at Hougang.

Midtown Condominium at Hougang.

Most buyers are willing to fork out $1.5 million for their first or second home, especially since loan limits have been tightened in the most recent round of property curbs. But experts are less concerned about the small size of shoebox apartments than two and three-bedders. They have voiced their concern that while it is reasonable for one person to live in a 500 sq ft studio space, it may not be so for small families to live within 600 to 700 sq ft. And these not only apply to private condos, but also to ECs (executive condominiums).

The trend looks set to continue, but is there any more space left to shrink? What quantifies “livable” space and are Singaporeans getting the quality of life they need?