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14 May

Singapore’s Luxury home prices remain stable

In most countries across Asia, high-end properties are seeing a considerable rise in prices. Only in Singapore and Hong kong, where property cooling measures were implemented, did prices remain stable.

While luxury homes here saw a 0.6 per cent dip in prices, in other major Asia cities such as Beijing, Shanghai, Bangkok, Kuala Lumpur, Manila, Jakarta and Mumbai, prices leaped an average of 6.1 per cent year on year. Singapore is the only city where year on year high-end home prices fell, at 4.3 per cent.

Corals at Keppel Bay.

Corals at Keppel Bay.

Which city saw the largest jump in luxury property prices? Jakarta – with an increase of 8.7 per cent in Q1, that is a whooping 32.9 per cent year on year. Kuala Lumpur and Beijing saw steady quarterly rise in property prices as well. But it is worth noting that the Chinese government is quite aware of a possible property bubble and may be clamping down on building and investments soon. Jones Lang LaSalle‘s head of Asia Pacific research, Ms Jane Murray, is predicting a fall of up to 5 per cent for high-end property here in SIngapore. As population and economic growth slows, the same is expected of the property market.

Have investors veered away from Singapore properties to focus on real estate  elsewhere in Asia and are Singaporean investors doing the same? As property cooling measures continue to kick in, will they deter home buyers even further? What will it mean for Singapore’s real estate market and is this the intended purpose of the property cooling measures?

6 May

No quick-fix to managing HDB flat prices

So says National Development Minister Khaw Boon Wan.

Ever since the Government announced that new HDB flats will come at a lower price, HDB flat owners have been expressing fears of losing their nest egg should prices of flats drop. But as new flats are limited to only certain groups and limited in terms of type and location, will there necessarily be a drastic drop in resale flat prices and are we worrying too early? Though the number of resale flat transactions have decreased, prices continue to remain high. And there will always be those who wish to choose a flat of their liking in a location they prefer, as opposed to trying perhaps numerous times in the HDB ballot queue.

HDB Flats THinkStockMr Khaw reassured Singaporeans that while prices of HDB flat will only drop “a few per cent over the next few years”, but in the same breath said that the prices of HDB flats cannot keep rising forever. “If housing prices keep rising,it won’t be good. When I came into the MND (Ministry of National Development) two years ago, that was my target”. And much has been done since then, with the ramp up of BTO flat supply, changes in income ceiling, limits on HDB flat sizes, increase in number of allocated flats for both first and second-timers, and even allowing singles to buy new HDB flats.

During the recent Our Singapore Conversation (OSC) dialogue, the idea of selling back new flats only to the Housing Board was faced with much opposition. Homeowners naturally worry that their homes will lose  their value and cut them off from the profit they can earn by selling it in the open market. Mr Khaw admits that resale flat prices are difficult to manage as they are largely subjected to the market demand. SLP International executive director Nicholas Mak speculates that one way of gently letting resale HDB flat prices drop is to decrease the prices of new HDB flats in the same estate.

Forestville Executive Condominium.

Forestville Executive Condominium.

Recent debate also surround the Executive Condominium (EC) scheme\. While some have said that those who can afford an EC should not receive subsidies from the Government, the scheme was specifically initiated to help those who may not qualify for other HDB subsidy schemes. Thus should ECs still be considered a value-added profit-making asset for their owners?

10 Apr

Slow private home sales – The Grange Road effect?

Is this merely a trend that is happening to properties along Grange road or are other city centre properties suffering the same fate? Prime district properties have been nursing a bruise on its sales records since last quarter of 2012. January’s new round of cooling measures with the increased additional buyers’ stamp duty (ABSD) and the threat of possibly more to come, has put the damper on the market even further.

Twin Peaks condominium at Leonie Hill.

Twin Peaks condominium at Leonie Hill.

Even new property launches, which have been selling like hotcakes in the suburbs, along this stretch have been falling flat. The 462-unit Twin Peaks have sold 68 of the 70 units released. Median sale price stands at $3, 157 psf. At The Lumos, although units went for sale as early as 2007, only 18 units have been sold. That is less than half of the 53 units in the high-end residential project.

Even completed projects have found the recent situation to be an uphill struggle. Cliveden at Grange, which was completed in 2011, has sold 80 per cent since its launch in 2007. That’s an average of 18 units per year. The increasing number of new launches in the vicinity certainly have not helped things, neither for the new properties themselves nor their older neighbours. The newbies on the block include iLiv@Grange, Ferra and Opus at Grange.

Cliveden at Grange condominium project.

Cliveden at Grange condominium project.

Resale home prices and sales numbers have already shown a dip. In 2012, only 21 resale homes were sold in the Grange road area. And rental prices have also slowed by 9.3 per cent to $8.49 psf in March 2013.

Will the sky-high prices of these sky-high luxury apartments continue to skim the price ceiling or will they drop as time passes? Industry experts are expecting sales in the area to pick up some slack this year, as the exclusivity of the Grange Road district and corresponding improvements in the Western economies may bring investors back for seconds.

12 Mar

New HDB flats 30% cheaper

National MInister Khaw Boon Wan has pledged last Friday to keep prices new HDB flats 30 per cent cheaper, keeping to their promise to help Singaporeans own a home.

Their aim? To make new HDB flats affordable once again, before the property bull run which sped well ahead since 2005, to have one in a non-mature estate paid off within “four years of salary”.  Current HDB flat prices are at about “5.5 years of salary”.

HDB Flats THinkStockThe Government’s new moves and announcements are clear indications that they plan to play an active part in Singapore’s real estate situation, at least in providing “alternative housing options”. Beyond price stabilisation, Mr Khaw has said that bringing down BTO flat prices are also part of the property cooling measures.

He has also raised a series of questions pertaining to Singapore’s long term housing plans:

  1. Should Housing Board flats continue to be an appreciating asset or return to being treated simply as a social need?
  2. Should the HDB build to meet sophisticated tastes or go back to the basics?
  3. How to keep flats affordable while continuing to encourage couples to be prudent?
  4. How should public housing respond to the needs of an ageing population?
Tampines Green Forest BTO Flats. Photo by HDB.

Tampines Green Forest BTO Flats. Photo by HDB.

There is still the issue of whether these low starting prices of HDB flats will be kept around the same affordable rates or will resale HDB flats continue their flight to higher heights. This may only be revealed in 10 to 15 years’ time but how immigration and housing policies are structured may very well be the rudder that steers the ship. To troubled waters or calm ones. Those at the helm will have an important role to play. And they have to act now.

4 Mar

Have HDB flat. Will buy Private Condominium

More are doing just that, it seems. A recent analysis of property market trends by DTZ Research has revealed telling signs of how many HDB upgraders out there are buying a second private property. In fact, out of the number of buyers who bought private homes last year, more than half currently live in HDB flats. 9, 380 private property units were purchased by buyers with HDB addresses whereas only 8, 239 units were purchased by those who are already in the private property market.

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.

Industry players speculate that most of these buyers could be singles living with their parents in HDB flats or parents who were buying properties for their children (or under their childrens’ names). There could also be buyers who bought private properties to live in whilst renting out their HDB flats to help pay for the mortgage. Under the current HDB rulings, HDB flat owners who fulfill their Minimum Occupation Period (MOP) are allowed to purchase private properties.

With that in mind, one of the most sellable properties were none other than the shoebox apartment. Strong demand for new private homes fell mainly into this lucrative category as these small units were mostly under $1 million and were considered to have high rental yield. A record 1, 675 shoebox apartments were sold in 2012, 17 per cent more than 2011.

Rising resale HDB flat prices could be the reason for driving HDB upgraders into the private property market. And mainland Chinese took first place in Q4, taking up 20 per cent of all foreign property purchases. That is one in four units bought by overseas buyers.

What does this really tell? Are the property cooling measures targeted at the right folks or have they left the essential market unchecked?

27 Feb

New Budget. New Property Tax Structure.

If you own and live in the home you bought, you may have to pay less in property taxes. If you invested in but do not live in the property you bought, especially if it is a high-end luxury property, you may have to pay more.

Budget 2013 logoAccording to the 2013 Budget announced on Tuesday, Deputy Prime Minister Tharman Shanmugaratnam has said that most owner-occupied homes will enjoy a lower tax rate. Most will agree that the higher tax rate for luxury residences and investment homes may bring about the balance which the housing market needs. Mr Tharman considers “the property tax a wealth tax and is applied to homes irrespective of whether lived in, vacant or rented out. Those who live in the most expensive homes should pay more property tax than others”.

New Property Tax Structure presented in 2013's Budget. Graph by singaporebudget.gov.sg.

New Property Tax Structure presented in 2013′s Budget. Graph by singaporebudget.gov.sg.

Tax rates will be calculated based on the Annual Value of the home, i.e. the estimated annual rent which the property may fetch. For homes with an Annual value of less that $8000, no property tax will be required. The limit used to be $6000. By raising the number to $8000, 950,000 may now benefit from this zero property tax band.

Investment homes which are not occupied by the buyer will now have to pay more in property tax, up to $24,000 for landed properties in central locations with an Annual Value of $150,000 and above. However, there may be some who are living in highly-valued properties but may be cash rich. What then? Mr Tharman has said that retirees will still pay less in property tax.

Marina Bay Suites.

Marina Bay Suites.

The new rates take effect in January 2014. What these new property tax guidelines will bring to the table is a $44 million reduction in tax revenue from the savings offered to owner-occupied home owners, and possibly a $72 million revenue from taxes from investment home owners. Will there be loopholes that property investors can get around and is it necessary to plug these loopholes before the leaks cause trouble in Singapore’s real estate market?

25 Feb

New Condominiums to look forward to

Before the cooling measures have hardly had time to, well, cool, the private property market is heating up once again with 17 new condominium launches coming up within the next few months.

With some stellar projects up for offer, buyers might be spoilt for choice. Though some might hold back from jumping into the pool straightaway, as long as the overall sales volume and showflat response hold positive, developers will still be happy with that result.

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

The huge number of units from these 17 launches, almost 7, 500 of them, were mainly thanks to the significant number of sites released by the Government via the Government Land Sales (GLS) Programme. One of the largest residential properties to be launched will be the Marina One project, developed by Malaysia’s Khazahan Nasional and Singapore’s Temasek Holdings as part of a land swop agreement. Located at Marina South, it will have 1,042 units for sale when it’s launched in October this year.

D'nest condominium.

D’nest condominium.

Some of the prominent launches include:
1. Trilinq at Jalan Lempeng
2. D’nest at Pasir Ris Grove
3. Bartley Ridge on Mount Vernon Road
4. Duo in the Rochor area
5. Urban Vista in Tanah Merah Kechil Link
6. Hillion on Jelebu and Petir Road
7. Hillview Peak on Hillview Avenue

All these new properties will have more than 500 units per project. Response to the upcoming series of new properties might very well be the gauge property developers have been waiting for. Industry players are expecting the take-up rates to slow down, especially for the higher-end luxury projects which are out of the reach of most first-time buyers and upgraders. Suburban condominiums may see healthier sales.

21 Feb

Will $1 million dollar HDB Flats become the norm?

While Singaporeans try to live with rising inflation, and the Government attempts to cool the property market multiple times, the peculiar case of rising public housing costs continues to rise its head in the sea of rising private property prices.

Perhaps this does not happen in many other countries, where most of  the time public housing is often put aside for the lower income groups or those on welfare, but in Singapore, public housing is a commodity and an investment tool. And it could be this concept which gave rise to continuously rising HDB flat prices.

Woodlands-Executive-Maisonette.jpg

According to data from the Singapore Real Estate Exchange (SRX):
In 2011, there was only 1 case of a HDB flat selling for more than $900,000.
In 2012, there were 18.
In 2013, in January and February alone, there were 18.

The trend is obvious and there seems to be no sign of doing a U-turn. Property analysts say these are usually units which provide value for money in comparision to private properties in the same area. Usually the larger units, its not longer the older resale flats in mature estates which are commanding such prices, even newer flats pricing themselves in the same range.

Bishan Shunfu HDB

In January this year, a 1, 750 sq ft executive maisonette in Bishan was sold for $1.01 million, beating the record of a $1 million Queenstown executive apartment. A 5-year Jalan Membina 1,180 sq ft 5-room flat is seen to be priced at $925,000.

With even more units from choice locations coming into the market in 2 years’ time, such as those at Pinnacle@Duxton, industry experts are expecting the number of $1 million resale HDB flats to go up. Will $1 million be the new property baseline? Will the National Development Minister‘s promise to unpeg new HDB flat prices from resale flat prices truly benefit? And who will benefit? Does this really take care of those who can neither afford resale HDB flats nor private properties and yet do not qualify to purchase new flats?

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