Consumer confidence in property market improving

Though gradual, the property market seems to be coming out of a long hibernation and there are some bright sparks to make 2017 a warm one.

VIIOThe supply and inventory stock is gradually diminishing, by 8.4 per cent at the end of last year, aided by the restriction in land supply by the government last year, the key word being gradual. Fortunately, the decline in home and rental prices have also been gradual, with no sudden collapse. Last year’s rate of decline of overall private home prices was at a 3-year low, at 3.1 per cent. The 2 years before saw a 3.7 and 4 per cent decline, counting backwards.

QuinterraBy now, consumers and investors are used to the price decline, which has been a regular occurrence since 2013 when the property cooling measures began to kick in. In the current market, any news of slower price declines will be good news, and of stabilisation, even better news. Private home prices have finally landed on a level where an increasing number of buyers find affordable and investment-worthy, which explains the boost in new home sales from 7,440 in 2015 to 7,972 last year.

Properties in the core-central region fared the best in the second half of 2016, while non-landed homes in the city fringe and suburbs registered 2 and 0.6 per cent drops respectively. Landed properties fared unexpectedly well with a 0.8 per cent price increase in Q4. Property analysts are expecting property prices to bottom out this year, which could the year when the property market bottoms out. The authorities do not yet seem to show any signs of easing the property cooling measures, at least not in the first half of the year.

Developers’ incentive schemes under scrutiny

As competition in the private property market heats up and sales slow down, developers have been coming up with creative ways to sell their unsold stock. Some have offered rebates, vouchers and even tiered payment plans. The Urban Redevelopment Authority (URA) has however been picking up on some creative incentive schemes which may have tripped up on regulations.

Lloyd Sixtyfive

Take the newly launched Gem Residences as an example. There is currently a 5 per cent minimum booking fee for purchases of a new home, and the developers of Gem Residences have tried to ease the burden for their buyers by offering cheques of $7,500 to $10,000 to offset their booking fee under a “specimen cheque scheme”. As this would circumvent the fulfilment of the minimum booking fee requirement, the developers have instead offered rebates or direct discounts accumulating to the same amount originally to be offered in the cheques.

Another project with a creative scheme is Lloyd Sixty Five in River Valley. Its developers had originally come up with an “experiential purchaser scheme” which offers the buyer the opportunity to stay in the unit with only a downpayment, and the option to purchase will only kick in 2 years later. The scheme is under review by the Controller of Housing as it is essentially a tenancy scheme.

Twin Peaks2Uncompleted residential projects in particular were under URA’s scrutiny. Completed projects with unsold stock enjoy slightly more leeway as they will already have obtained their Certificate of Statutory Completion and are no longer restricted by the Housing Developers Rules. Developers of OUE Twin Peaks were for example able to successfully offer deferred payment schemes which allowed buyers to pay 20 per cent of the purchase price up front, with the remaining amount payable only 2 to 3 years later. Buyers who may be banking on the lifting of property curbs, in particular the total debt servicing ratio (TDSR) by then may find this scheme favourable.

Prices of suburban properties dipping

Prices of new properties in the prime central districts have been rising, even as the market dulls. Suburban homes are feeling the strain put on the market by the influx of completed new homes this year.

The PanoramaBuyers seeking out properties in the suburbs tend to be more price-sensitive, and are often hampered by the total debt servicing ratio (TDSR) framework and the additional buyers’ stamp duty (ABSD), leading to higher competition from an expanding pool of stock for a shrinking pool of ready buyers. Prices at The Panorama in Ang Mo Kio have fell 9.7 per cent since its launch to $1,213 psf and similarly in Clementi, units at The Trilinq are now priced around $1,408 psf, almost 9 per cent lower than its launch price.

In comparison, buyers of properties in the prime central districts are more affluent and are able to afford the prices properties here demand. For example at Robin Residences, selling prices are now hovering at $2,371 psf, 2.4 per cent higher than its launch-price. Buyers of centrally located properties also have stronger holding power and less likely to sell unless the price is right.

RObin ResidencesThe price gap between suburban and central district homes have been widening. Last year, CCR (core central region) new-home price premiums were 81 per cent over those in the OCR (outside central region). As more OCR homes hit the secondary market this year, how will smaller investors handle the competition?

 

TOP-ready properties come up tops

The common four- to six-year wait for a new property to be built can be quite a nerving time. It makes planning for the future a little tricky and may not make for the best short-term investment.

Tropika East

Photo: Tropika East condominium

Purchasing a property which has already attained its Temporary Occupation Permit (TOP) however, could save you a lot strife and worry. For buyers purchasing for occupation, TOP-ready units are available to move into right away and often with renovations all done. That saves not only time but money. And for those who are looking for investment opportunities, private properties which have attained their TOP can be leased immediately. This year will see a total of 27,149 private condominium units from 71 TOP-ready projects. Another plus point is that buyers can physically inspect these units for their pros and cons instead of doing guesswork from just looking at brochures and show flats which may leave a margin of error.

Jade ResidencesPhoto: Jade Residences 

Properties in some popular suburbs are finding ready buyers are euHabitat and Tropika East in the East,  Jade Residences in Upper Serangoon,  Echelon in Jurong, Bartley Ridge on Mount Vernon and Sky Green condominium in MacPherson. These residential projects with ready units are situated in prime city fringe or Outside Central Region districts. In the central regions, TOP-ready projects to look out for include The Scotts Tower, Robinson Suites and 26 Newton.

However, not all projects with TOPs are equal. It is always wise to do your research and understand that location is key, and getting a solid valuation done on the property using private and public research sources or engaging experienced property agents will help you get the best out of your property purchase.