Lull in private home prices

Despite a projected lull in local private home prices this year, interest in Singapore’s property market remains steady as prime residential property prices are still 165 per cent and 92 per cent lower than those in Hong Kong and London respectively.

 Photo credit: Singapore Tourism Board

So despite property analysts predicting a 5 to 10 per cent fall in prime and mass market private property prices this year, the local property market’s core remains strong. 2010’s property cooling measures may have kept property prices 17 per cent lower than what it could have been. Private home prices have fallen 4 per cent last year, following a 3.7 per cent fall in 2014. In the luxury home market, prices have fallen 20 per cent since the Additional Buyers’ Stamp Duty (ABSD) was implemented in 2011.

China’s recent growth slump, plunging oil prices, the Federal Reserve interest rate hike and a general sense of a global recession looming, might consequently affect the property markets around the world. Businesses may reconsider their expansion plans, which could mean a fall in demand for office spaces and commercial properties. This in turn may affect the number of expatriates entering the country, which may also affect rental prices.

This year could prove tough for investors and property sellers, but not without glimpses of hope. 2016 may be the year to hang-in-there, but industry experts are expecting 2017 to take a turn for the better.

Fewer launches More sales

Despite property developers rolling out fewer new property launches last year, sales of new private homes rose 2.9 per cent from 2014, to ring the tills at 7,529 transactions in 2015. The number of new homes launched last year was in fact 8.2 per cent lesser than that of 2014. Buyers may have realised that property prices are stabilising and will not decline much more, and thus are returning to the market to pick off already-better deals.

The Trilinq
Photo: The Trilinq

759 new private property units were sold in November alone last year, buoyed by the launch of The Poiz Residences. In December, there were 384 transactions recorded, 154 more in a year-on-year comparison with December 2014. Though 2013’s peak saw 14,948 new home sales, almost double that of last year’s, the signs are more positive than expected. Property investors may also be picking up real estate as the stock market remains volatile. Perhaps declining property prices have also managed to strike a chord with investors. At The Trilinq for example, which first launched at prices of $1,545 psf in 2013, have since trimmed their prices to $1,329 psf.

Market activity this year will await to be seen as the interest rates hikes and loan restrictions combined, and the reduction of land sites sold this year, may deter buyers and lower demand. Industry analysts are however remaining positive, projecting 8,500 new private home sales this year. They are expecting lower overall quantum prices to be the draw of this years’ property market.

A stable year for Singapore’s property market?

Resale HDB flat prices have fallen only 1.5 per cent last year, as compared to 6 per cent the year before. Industry experts are not expecting prices to fall much more this year and in fact last quarter saw a 0.2 per cent rise in HDB resale flat price index. But that may not mean a sudden rebound of HDB flat prices as the options available to home buyers have now increased, especially as private home prices have fallen and more are now eligible to purchase new BTO flats directly from HDB.
Poiz Residences2Photo: Poiz Residences

HDB has announced that they will be rolling out up to 18,000 new flats this year, 3,000 more that last year. Private properties are now more affordable as developers have caught on to buyers’ affinity to total quantum selling prices. Last year, private property prices dropped 3.7 per cent overall, and a 0.5 per cent fall was registered last quarter of 2015.

The number of new property launches in the 4th quarter propped up new property prices with launches such as Principal Garden, The Poiz Residences and Thomson Impressions. Prices of new units in the city fringes fared well with no price changes. Landed property prices however fell 10.4 per cent over the last 2 and a half years, with prices falling 4.4 per cent last year alone.

Property analysts are watching the market closely as they are expecting the interest rate hikes to put a strain on those servicing home loans, especially as the property cooling measures concurrently remain.

Property market looking positive

Buyers, it seems, are slowly realising that property prices are not likely to fall any further, and are making their way back into the market once more. Both in the private property and HDB resale flat sectors, sales are picking up and the year might just close on a happy note.

Trilive KovanPhoto: Trilive condominium 

Resale private properties in particular are faring well, as they one up on newer launches in terms of price per unit of floor area. They are usually larger in size and while may not be cheaper in terms of the total quantum price, buyers consider them better value for money in the long run especially as more buyers of resale units are now owner-occupiers rather than investors. The latter often prefer smaller units in newer launches as they come at a lower overall selling price, though rental competition may prove tough in the market ahead.

More buyers now hunt for residential units near their workplace or schools and are less adverse to living in the suburbs, especially around a strong regional centre such as Jurong, Tampines or Woodlands.

TheTerraceECPhoto: The Terrace Executive Condominium

In the resale HDB flat front, transaction numbers are up 10 per cent from last year. Property analysts are expecting up to 19,000 transactions of HDB flats this year alone. Prices of resale flats are unlikely to fall any further in 2016, and may even pick up a little as demand returns.

$1.5 million sweet spot for private resale buyers

Singapore’s property market will be expecting some adjustments in the private resale non-landed sector as more completed units continue to enter the market next year. But prices have stabilised somewhat in the past couple of months after 5 months of consecutive decline.

Loft @ Nathan, one of the new property launches available to buyers.

Loft @ Nathan, one of the new property launches available to buyers.

Property analysts have realised that buyers remain highly sensitive to the total quantum price and they seem to have reached a sweet spot of $1.5 million. Smaller units are more susceptible to price changes as their numbers are on the rise, causing rental competition to be rather fierce. In October, a 0.1% value increase for private completed non-landed properties was registered by the NUS Singapore Residential Price Index. More buyers have been setting their sights on resale properties as developers largely cut back on the number of new launches in the second half of the year.

There were 247 more transactions registered this year as compared to the last and with a $750,000 increase in sales figures. There has also been a shift this year in the market’s focus, from new developer properties to resale properties. More buyers are own-occupiers who are looking for immediate housing needs, thus are more willing to pay for resale units.

Industry experts are expecting 2016 to bring more fluctuations as the market copes with new homes reaching completion, private homes and HDB flats included.

Maxing the potential of HDB Housing Grants

The General Elections of 2015 have brought about some changes in the local housing and property scene. With raised income ceilings for new flats and executive condominiums, plus a series of other adjusted or new housing grants, more HDB flat applicants are able to now secure a unit and at less by making use of these new grants.

HDB flats 10The new Proximity Housing Grant provides singles and families who are buying a resale flat with or near their married children or parents, with a respective $10,000 and $20,000 grant. Since its implementation on 24 August, 684 families and 53 singles have applied for the grant. Income ceilings have also been raised to $12,000 (from $10,000) for families and $6,000 (from $5,000) for singles. This means more would qualify for a HDB flat and the respective grants, possibly allowing some applicants who may have previously fallen just short of the income ceiling to now successfully apply for a unit.

Indirectly, this move may have also helped to boost resale transactions. As applicants who wish to live near their parents or married children may not be able to find a new flat within close proximity, especially in more mature estates where new flats are rare, resale flats may be their next best choice. With a combination of the Proximity Housing Grant and other CPF housing grants, what they may finally have to pay for a resale flat may be much more palatable.

Resale HDB flat prices hold steady

At this point of the property market cycle, prices holding steady could be a positive sign, indicating effectiveness on part of the cooling measures which did not crash the market but rather, merely realigned the prices gently. The change evolved over a long period of time, which is more palatable for sellers and the lowering prices may have also increased sales volume by enticing buyers.

BidadariPhoto credit: HDB

A 0.3 per cent fall in HDB resale flat prices indicate a slowly stabilising market. Although prices have been falling for 9 quarters straight, the last quarter showed the lowest rate of decline. In 2014, overall resale HDB flat prices fell 6 per cent. Industry analysts are expecting a smaller dip this year of 2 to 2.5 per cent. Some buyers may have been holding back on buying in the open resale market, in wait of November’s major launch of new Build-to-order (BTO) flats which includes prime units in Bidadari and Punggol Northshore.

Suburban resale private property prices are falling at a steeper rate of 1.3 per cent and if the prices fall even further and at a quicker rate than HDB resale flat prices, the gap between the 2 market segments will narrow. This could then draw a substantial pool of buyers from the resale flat market into the private property market, which could then give sales volume a boost and slow down the price decline in the private property sector.

Sims Urban Oasis

Photo: Sims Urban Oasis

Property developers are keeping a close eye on whether cooling measures will be adjusted, and pricing their units accordingly. We could also expect a more staggered schedule of new launches as developers become more careful about not cannibalising on one another’s market share. More so than before, it may be a matter of timing and opportunity.

Private property prices remain level

The NUS Singapore Residentail PRIce Index (SRPI) showed a 0.1 per cent rise in private non-landed home prices in September. But property experts say it could simply have been a post-election response, when buyers might have held back to see if the property cooling measures would be removed. Now that the authorities have indicated the cooling measures are here to stay, at least for now, some buyers may have taken advantage of the already-lowered prices and closed some transactions.

The Scala condo Serangoon

Photo: The Scala condominium in Serangoon

The resale private home market in particular has benefited from the lack of new property launches in September. Non-central units rose 0.3 per cent while smaller units gained a 0.4 per cent footing. But as 2016 brings an onslaught of completed new properties, the resale market may have to brace itself for a bigger hit. Industry players are expecting home prices in the non-central regions to continue on a downward trend as the number of completed units there rise. Leasing may also prove difficult as there will be a huge leap in supply while immigration policies are now tighter, which implies a lower demand.

While recent figures point to tenants looking towards to the central regions for leasing prospects, high-end properties may be hitting a wall in both sales and leases as competition has lowered rental prices in the suburbs and more tenants are seeking options there. The property market seems to be reaching a standstill as the year draws close and the festivities take over, the real time to watch the market might be the first quarter of 2016, which will set the tone for the year ahead.