Singapore prime properties considered reasonably priced 

Singapore properties are expensive. But compared to other major global cities such as London, New York, Paris, Tokyo and Hong Kong, perhaps they are simply reasonably priced, particularly in the category of prime district properties. The government-implemented property cooling measures might have helped keep prices down.

Marina One ResidencesAccording to the Monetary Authority of Singapore’s (MAS) Financial Stability Review from November 2015, Singapore’s home prices very well could have been 17 per cent higher than they are now if not for the property curbs implemented since 2010. The ratio of home prices to income for Singapore is now 5.6 per cent, lower than the 8 to 9 per cent for most major cities. Mortgage rates (at between 1.6 to 2 per cent) are approximately the same as average rental yields for prime properties, which are currently at 1.8 per cent.

Average luxury prime district home prices are hovering around $1,991 psf at the moment, about 20 per cent lower than the segment’s peak in 2011. Though sales volume has been low in the past year, as the year moves ahead, property analysts are expecting rental rates to increase after this year as the supply of prime properties dwindle. For savvy investors, the time to purchase may be soon, before property curbs are lifted and demand rises once more.

 

Singapore property market on the mend?

Is Singapore’s property market finally bottoming out? Are current property prices the lowest they can go?

WhitehavenHong Kong and Singapore are 2 of Asia’s most expensive residential property markets, and while both countries’ governments have implemented property cooling measures to help abate the tension, prices remain high. Though Singapore’s property price spike of 92 per cent in the decade between 2003 and 2013 was not as drastic as Hong Kong’s 370 per cent in the same time period, housing cost has increased considerably and was much fodder for debate during the past 2 elections. While home prices have fallen 1.2 percent in Singapore and 13 per cent in Hong Kong since September 2015, the fall will have to be much more drastic for the situation to return to what it was before 2003.

Taking inflation, economic growth and global economics into consideration, property analysts feel that Singapore’s property cycle has almost reached its bottom or turning point as it is in a much more advanced state than Hong Kong’s. Considering the gentle slope of decline in Singapore’s property prices, a sharp rebound seems unlikely. Will there however be a glimmer of hope for a gradual increase upon policy changes and changes in the demand and supply scale?

Slower pace of private property price decline

Resale private apartment prices have been on the decline since its peak earlier in the decade, after the effects of property cooling measures kicked in and fuelled by a recent building boom. But the pace of decline has slowed down 2.1 per cent last year, in comparison with 2014. The URA property price index indicated a 3.7 per cent fall last year as compared to 2014’s 4 per cent.That may be a sign the market is finally stabilising, and sellers are no longer pressed or enticed to sell quickly.

St. Regis Residences on Orchard Road.

St. Regis Residences on Orchard Road.

The resale private property market did however report some profit losses. For example, some resale units at St. Regis Residences registered losses of $542,30 up to $4.78 million for a 4-bedroom penthouse.

2015 saw a total of 4,999 resale transactions of private properties, up 22 per cent from the year before, though still a far cry from the 10,598 in 2012. Property analysts are expecting a continued decline in prices, though at a slower rate, as buyers and sellers are still taking time to adjust to the loan restrictions and also now to cope with the new interest rate hikes. Buyers are however gradually acclimatising to the current market situation where new properties are priced affordably and resale property prices may not be drastically reduced, and thus are re-entering the market albeit with some care.

 

Suburban private home prices waver


Parc EleganceNovember saw a 0.6% fall in private home prices, pulled down mainly by falling figures in the shoebox apartments segment. These units sized below 506 sq ft fared 1.2 per cent better in October than in November.

Property analysts are expecting some selling action in the months ahead, particularly in the non-central suburban private home segment as the surge of completed units and increased interest rates may force the hand of investors who have overstretched themselves. However, the number of sellers may outweigh the number of buyers as competition toughens up.

Properties in the central regions or prime districts of 1 to 4 and 9 to 11 could have fared better as well, with a 4.5 per cent fall in prices in a year-on-year comparison. That is a drop of 13.1 per cent from the peak in May 2013. Industry players have reasoned that properties in the central regions are generally larger in size, which means they also have a higher total quantum price, which makes them harder to find buyers for. Foreign buyers are also expected to pay a 15 per cent ABSD (Additional Buyers’ Stamp Duty), which may have turned some investors off the Singapore property market.

The Boutiq Killiney

Photo: The Boutiq Killiney

As the target audience for the central and non-central regions are quite different, sellers and buyers alike may need to alter their expectations of the market in 2016. In the central regions, some sellers may be ready to let go of their properties as the economy slows, but prices are not expected to fall drastically as the owners usually have the holding power to hang on to their properties till the price is right. In the non-central regions however, where owners and buyers are usually salaried workers, pricing may be more dependent on external forces such as the overall rate of economic growth, employment and mortgage rates, rental potential and debt ratios.

More for less – Smaller condo apartments

With the rising prices of land plots sold under the Government Land Sales programme and with developers taking into consideration how the property cooling measures have affected buyers’ purchasing power, private apartment sizes have been diminishing since 2010.

LakevillePhoto: Lakeville at Jurong West

More apparent in units in the city fringes, average sizes have shrunk from 1,051 to 810 sq ft. And in the suburbs, apartment sizes went from 878 sq ft to 811 sq ft; though the average sizes from new projects actually dropped from 1, 113 sq ft in 2006 to 667 sq ft in 2011 but rose again to 928 sq ft in 2014.

In 2012, the Urban Redevelopment Authority (URA) put in place guidelines for the maximum number of units for condominium developments outside of the central area. Developers have since noticed that buyers are more sensitive to the total quantum price of a unit rather than per unit prices, especially since the implementation of loan curbs such as the Additional Buyers’ Stamp Duty (ABSD) and Total Debt Servicing Ratio (TDSR), hence maximising the land area and total number of units would be the best way to go.

Symphony SUitesPhoto: Symphony Suites

There are some residential projects which chose to follow their own path however, including Lakeville and Symphony Suites. But as the population continues to grow, it seems that unit sizes will only continue to diminish. Resale units may then have an edge over the smaller-sized newer units, provided pricing is equally competitive when time comes.

More data for Private home buyers

Private property buyers will no longer have to grasp at thin air in their attempt to make sense of which way the market is leaning in terms of prices, sales volume and even incentives offered by the developers or sellers.

iProperty Transacted PRices

Photo: iProperty’s transacted property price trends data is provided online

Starting from June 5, buyers or anyone who wants to do their market research can now access the Urban Redevelopment Authority’s (URA) website. Data will be published weekly. That would also mean much more transparency in the marketplace, including information provided to banks in order to allow them to better gauge applicants’ loan limits and also loan amounts which take into consideration value benefits such as cash rebates, legal and stamp duties absorption, rental guarantees and furniture vouchers.

Improvements will also be made into transparency of showflat depictions by developers. Previous complaints about obvious differences between showflats and the actual unit have not fallen onto deaf ears. Now, the Housing Developers (Snow Unit) Rules which will be in force starting from July 20, will keep everyone on the right track. Showflats ready for viewing before July 20 will however be exempted from the rules, though developers are required to made clear the differences between the showflats and the actual unit.

How will these new rules change the playing field? Will it be easier or more difficult to secure loans from the banks once these rules are put in place and enforced? Will that in turn affect the buying power of the already restricted purchasing crowd?

Singapore home prices – The slow decline

Prices of residential properties, both private and public, may see a slow but continued decline in 2015. This year, the resale non-landed property market was ruled by an undulating price chart. After a recent rise in prices in October, prices once again fell in November. Property experts have found it impossible to predict future trends from such irregular movements and can only report the figures as they are.

Photo by ThinkStock.

Photo by ThinkStock.

In October for example, despite an increase in the number of mortgage sales and non-performing loans, prices of resale homes picked up nevertheless. Most of the information comes from URA’s quarterly statistics of private property transactions with caveats lodged. This however may not truly reflect home sales volume and prices, as they exclude factors such as developers’ discounts and rebates. But URA has mentioned disclosing prices of individual units in the near future. And perhaps a more frequent report would be helpful to the industry.

On the HDB resale front, the Minister for National Development, Mr. Khaw Boon Wan, has said that he hoped to see “single digit” fall in prices in 2015, indicating a gentle and gradual decline similar to that in 2014. The government is likely to tread lightly in this area as a drastic fall in home prices will bring about dissent from current home owners and will possibly affect their position in the next election. Buyers can expect a fall of about 8 per cent next year.

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.