New Thomson MRT Line will benefit East Coast residents

Not only will property owners in the North reap the benefits of the new stations of the up-and-coming Thomson MRT line, but those in the East Coast will also see the value of their properties rise in the long run as the new MRT stations run through Tanjong Rhu, Katong Park, Marine Terrace, Siglap, Bayshore, Bedok and Sungei Bedok.

LTA - TELPhoto credit: Land Transport Authority (LTA)

The Thomson-East Coast Line (TEL) will connect more areas in the Northern and Eastern parts of the country to the city centre and cut travel time considerably. There are a number of exclusive and boutique private residential properties in the East as it has been a popular area for expatriates, but a boost is expected when the TEL commences service in 2019. Property analysts are already expecting a 5 to 10 per cent rise in property prices, if the response to the North-east Line (NEL) stations are anything to go by. And upon completion of the MRT line, they foresee a rise of up to 12 per cent.

Some of the properties which may enjoy the most out of the announced realignment of the TEL includes condominium developments in the Tanjong Rhu area such as Casuarina Cove, Tanjong Ria, Meyer Residence, The Belvedere and Water Place. Properties nearer the already existing Bedok and Tanah Merah mrt stations may not see as significant a change.

Marine BlueNearer Siglap and Bayshore are private apartments such as Lagoon View, Laguna Park, Elliot at East Coast, Bayshore Park, The Bayshore and Costa Del Sol. Cote D’Azur, The Palladium and The Seaview along Marine Parade could also see a rise in home prices in the future.

How will developers price new properties in the area which have yet to launch? Will they release units are higher prices or will they keep to the current market values? New launches coming up include the 124-unit Marine Blue and 109-unit Amber Skye.

Property market slump continues

Resale home sales and rental prices have continued to soften as we reach the middle of Q3. July proved to be rather quiet for the resale private home market as prices reached a 21-month low, according to the Singapore Real Estate Exchange (SRX) figures.

LakevilleAs more new private properties reached their completion dates and entered the rental market, the number of units for rent increased, which caused the rental market to become more competitive. And as immigration rules tightened, the supply and demand scale tipped in favor of tenants. Rental prices were at a 38-month low last month. And the blow is felt not only in the private property market but also the HDB resale market with prices dropping to a 30-month low in July.

The areas with the largest price decline is the city center, with prices dropping 4 per cent. This is followed by the city fringe areas with a 1.1 per cent dip and the suburban districts with a 0.6 per cent drop. Property experts say that the drop in rental prices could be one of the reasons contributing to the slipping resale prices.

With property prices so closely linked to immigration policies in this small nation, how will the authorities balance the issues of housing and population?

$1 million sweet spot for home prices

The average affordability ceiling for properties have dropped by almost $200,000 ever since the Monetary Authority of Singapore (MAS) placed curbs on loans. The average price home buyers can now afford, or are willing to fork out, is $1 million. Properties between the total quantum range of $800,000 to $1. 2 million generally sit better with buyers. The range used to be wider, with homes reaching $1.4 million selling just as well.

LakevilleDevelopers have been quick to realize the shift and have been offering considerable discounts or competitive pricing for new launches. Smaller units such as studio apartments and one- or two-bedders have also performed better than their larger counterparts. About 8,254 homes priced between $700,000 and $1.2 million were sold during the last year. Properties which were offering more affordable units, such as the Coco Palms in Pasir Ris which launched units at $980 psf, were able to garner more sales.

And for buyers hoping to secure a home below $500,000 there are now more available, and more sold. In the last year, 291 units below $500,000 were sold from June 2013 to June 2014. Comparing to the year before, only 61 units were sold within the same time frame. Buyers consider smaller units easier for both occupier and rental purposes, plus most HDB upgraders rate affordability of homes as between $900,000 to $1 million.

T.D.S.R – What it means for the property market?

Total Debt Servicing Ratio. Or Total Damage to Singapore Residential as some industry players would put it?

The real estate sector is in a little bit of a sway at the moment. With the situation tilting this way then the other every other month, the outlook is clearly unclear. The latest loan curbs seem to be taking its toll on the property market, with a reported 73 per cent drop in sales in July, following an already considerable drop of 65 per cent in June.

Kensington SquareNot surprising at all since the immediate effect is that it is not as easy as before to borrow. Loan approval times have lengthened and loan amounts are restricted. Although sales are still happening, buyers are no longer able to commit to purchase as quickly as before. Unlike January’s measure which increased the Additional Buyer’s Stamp Duty (ABSD) percentage, developers are unable or have yet to find ways to soften the blow for their buyers.

But despite the sudden plunge in new home sales, industry experts are not worrying excessively over the numbers as it may be too early yet to tell if the effects will stick. With this month being the Hungry Ghost month, they are not expecting a sudden lift in sales. They are hoping to see a strong rebound in October when new properties will be launched once more.

And as home prices continue to rise, response from the market in the upcoming months may also be a good indicator of how resilient the market is and whether the pool of buyers  and renters will continue to grow.

Resale home sales slightly dented by New properties

As more new properties continue to launch, resale homes are seeing a slight dip in sales volume as many opt for the former. Resale home prices also fell a 0.4 per cent in June. This is a steeper decline compared to the 0.2 per cent drop from April to May. Industry experts are not too alarmed by the drop as the June holidays usually mark a decreased interest in property sales and buyers could also have been waiting out the rising interest rates. Another reason could be that resale home  owners were asking “optimistic prices”.

Liv on SophiaThere is some debate over whether this decline will deepen and lengthen. Some analysts noted that secondary property market sales volume has decreased from two-thirds of the total transacted sales to only one-third since the last quarter of 2008. But others defer on the point, saying that less than a quarter of declining sales does not necessarily indicate the future demise of the secondary market and despite a dip in sales volume, resale home prices remain high.

In the current market where new is constantly available, the competition is high and thus investors are seeing more potential in the primary housing market. But who is to say that when the market is saturated, buyers will not turn back to the secondary market with its pluses. Buying the right property in the right location early usually means higher potential, but as the society changes and as global economies adjust to one another, there are always possibilities of older properties rising in value over the years.

La Fiesta condominium in Sengkang.

La Fiesta condominium in Sengkang.

It should also be noted that the drop in resale prices was the largest in the Central Region. Outside of the central region, prices of private properties rose  0.5 per cent following a 1.5 per cent drop in May. Property prices are unlikely to rise much more in the quarter as the market adjusts to the stricter financing rules imposed by the Monetary Authority of Singapore (MAS) last month. However, most buyers are still strong in liquidity thus able to hold on to their properties thus prices are also unlikely to drop.

13 and 14 – Good numbers in the Property market

Considered unlucky numbers by some, 13 and 14 may not be so bad after all when it comes to property districts which are gaining in popularity and home prices.

The fact that it provides a relatively central location without the high prices of the prime districts lends it the credibility as the next area to watch. District 13 consists of Potong Pasir and MacPherson whilst Geylang, Eunos, Kembangan and Paya Lebar fall under district 14.

Shoebox apartments were top sellers for HDB upgraders. Seen here is the Bartley Ridge condominium.

Shoebox apartments were top sellers for HDB upgraders. Seen here is the Bartley Ridge condominium.

In district 13, which falls along the North East and Circle MRT lines, Bartley Ridge is one of the hot sellers. This 99-year leasehold, 868-unit condominium development is just a stone’s throw from Bartley MRT station and the average asking price is currently at $1,241 psf. It was launched only in March this year. 8@Woodleigh is another new property which has drawn the attention of many home buyers. It has one of the highest asking prices at $1,627 psf.

Waterbank DakotaVenturing eastward into district 14, an area famous for good food amongst other facilities and amenities, Waterbank at Dakota is one of the noteworthy non-landed properties in the district. Just a short distance from the Dakota MRT station on the circle line, it averages from $1, 516 – $1,615 psf for its one-, two- and three-bedders. Nearer Kembangan MRT station on the East-West MRT line is the freehold residential project Vacanza@East, with lower asking prices of $1, 262 – $1,335 psf. Other properties in the area include Dakota Residences, Le Crescendo and Simsville.

Only 14% of resale private non-landed homes dipped in prices

From October 2012 to April 2013, only 4 districts out of Singapore’s 28 districts saw a dip in resale non-landed home prices. And most of them were in the city centre. Suburban homes outside of the Central Region all rose, whether slightly or by leaps and bounds.

The Interlace private condo apartments on Depot Road.

The Interlace private condo apartments on Depot Road.

The area where prices fell the most was District 8, where Little India stands. Resale home prices there dropped 12.2 per cent from $1,320 psf to $1,159 psf, according the the Urban Redevelopment Authority’s data. Most of the units which saw a decreasing psf pricing were those at the 44-unit Jalan Besar Plaza. The other district which registered a big dip in resale home prices was district 12, which includes Balestier, Toa Payoh and Serangoon. In districts 7, 10 an 26, prices dipped as well, but only very slightly.

Sales of new residential non-landed homes were the main reasons behind the drop of resale home prices. Buyers now have more to choose from within the same area and are attracted by all things ‘bright and beautiful’. In Balestier for example, a 154-unit condominium, Prestige Heights, sold their shoebox units at $2,119 psf in March, the highest so far for the development, bringing the median price up.

H20 Residences

H20 Residences

Over at district 28, Seletar’s media prices fell 18.3 per cent from $1,179 psf to $963 psf. Again, new launches in the area could have directed attention away from resale homes.  Units at the newly launched H20 Residences sold at $908 to $1, 006 psf. Seletar Park Residence, launched October last year, registered an average price of $1,191 psf the same month.

Other properties which may have lowered their selling prices are newly launched units at The Interlace and Harbour View Towers in district 4. The former sold at a 24.5% lower median price of $913 psf and the latter at $838 psf in April, a drop of 34%.

But the question remains: Are the drop in home prices are a true reflection of the effectiveness of the cooling measures from 2012 and 2013? And are further measures are required.

New Homes sales halved

New properties rode the big wave earlier this year in the first quarter. Now, the tide has brought them back on the ground.

Sant Ritz near Potong Pasir MRT station.

Sant Ritz near Potong Pasir MRT station.

But the reason may not be because the fish are not biting. There are simply fewer launches in April. Although new home sales saw a spike in March, industry analysts are putting it down to pent-up demand following January’s cooling measures. Are April’s numbers more reflective of the actual effect of the property curbs? As the heat from Q1′s fever dies down, home buyers who are shopping for a home may be holding back in wait of potential launches in the coming months.

The most recent launches were Sant Ritz in Potong Pasir , Jade Residences in Upper Serangoon, Cosmoloft in Balestier and The Siena at Farrer Road. Data from the Urban Redevelopment Authority (URA) indicated 104 units sold at the 214-unit Sant Ritz, at an average of $1,494 psf. At Jade Residences, buyers snapped up nearly half of the 171 units at a medai of $1, 592 psf.

cosmoloftBuyers are becoming more savvy, and are increasingly not only drawn by a property’s location but also design and potential investment value. Do buyers now have the upper hand and will developers be pressed to lower selling prices? CBRE executive director of residnetial Joseph Tan believes that buyers now draw the line at properties ranging between $900 to $1, 600 psf. Properties selling above that price line may not see as many takers. For now.

Deputy Prime Minister Tharman Shanmugaratnam’s statement last month which spoke to the unlikelihood of more cooling measures could also mean buyers are now in less of a hurry to buy up properties and can well afford to play the waiting game. It may seem like a supply glut could be near, but as soon as population increases, and depending on how fast a rate, demand will soon rise as well. Is it better to buy now than to wait for prices to drop?

Upcoming launches include KAP Residences at King Albert Part, Corals at Keppel Bay, Liv on Sophia near Dhoby Ghaut MRT station and Stratum in Pasir Ris.