A resale private condo market respite

3 consecutive months of rising private non-landed home prices is reason enough for some mid-year cheer. Could this be a sign of respite from the recent property market lull?

GramercyParkProperty seekers and buyers who have been on the lookout for good deals and the right opportunity to jump back onto the property investment train have proven to be more active of late. Incentive schemes for various residential developments such as OUE Twin Peaks and Ardmore Three have also helped boost sales and prices. The former’s deferred payment scheme has received positive response from buyers, which ultimately translated to sales. The number of resale units sold in May rose by 36% with 840 units sold. 619 units were sold in April.

Prime central region properties are once again finding favour with investors as they view the potential value of the private residential properties here with new eyes. The next launch in the core central region (CCR) would be Gramercy Park luxury apartments by City Developments.

Property analysts are however cautious about their predictions for the rest of the year as the cooling measures will still mean buyers continue to be price-sensitive. They are expecting resale private apartment prices to fall 3 per cent across the board this year.

 

London properties only foreign investors can afford?

Londoners are railing against the consistently rising property prices which have reached a mark where only rich foreign investors from Middle East and Asia are able to afford.

As foreign property investments become more common globally, countries are finding the need to regulate the property market and it ultimately comes down to the question of priorities. Taking notes from the US real estate bubble a decade ago, Australia and Singapore have both recently made policy adjustments to guard against excessive financial loans and foreign purchases on local properties.

London PropertiesLondon’s new mayor may also be lobbying to make moves to allow residents to purchase new properties ahead of foreign investors who have been snapping up units with fervour, with prices rapidly rising over the years. The average price of a home in London now costs approximately S$1.2 million and rental for a flat in central London can easily be S$2,700 per month. 20 per cent of home sales in Kensington and Chelsea are from foreign buyers and for new properties, the numbers can come up to as much as 75 per cent, with almost 67 per cent of them purchasing purely for investment purposes.

LondonProperty2Though some of these foreign buyers are purchasing units to rent out, some are owned by shell companies who leave the units empty on end, taking away essential numbers of available homes for London’s residents when they are already only rolling out half of the 50,000 new homes required each year.

With similar high-population versus limited land issues, Singapore’s average private home prices could easily rival that in London. While income growth lags behind other first world cities, living expenses are not necessarily remaining stagnant, will the country’s government need to revise their strategies in keeping homes affordable?

Foreign investors like Singapore property market for its stability

http://www.thehumanbuilding.comThe recent en bloc sale of Shunfu Ville to Qingjian realty plus a $145-million dollar sale of a Cuscaden road bungalow to a Hong Kong Tycoon may have boosted foreign-investment sentiments, especially in the property market. It shows that many high net-worth individuals and funds are finding long term potential in Singapore’s property market.

AsiaSqaure

Photo credit: http://www.thehumanbuilding.com

They often have the financial holding power and are looking beyond short-term cyclical trends, setting their sights instead on mid- to long-term goals of 5 to 10 years. Asean is just beginning to boom, as many of the nations and economies become interwoven and thus provide more opportunities for growth and a general sense of vibrancy and promise. Aside from residential properties, commercial properties are also faring well, with offers of up to $560 million being made for the Straits Trading Building on Battery Road and $3.5 million for Asia Square Tower 1. Many regional and global companies are setting up headquarters in Singapore and will be looking at picking up office, commercial and retail spaces.

The recent dealings though hardly representative of Singapore’s weakening local market, may be a positive sign that companies, funds and high net-worth individuals are still happy to put their monies in Singapore properties. And though a market turnaround may not be quick, the time will come.

 

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.

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?

Private homes sales show slow and steady improvement

Twin-Peaks3Private non-landed property prices have been rising for 2 consecutive months now, a positive sign considering the recent market lull. Though values and volume are still lacking behind that during the peak of 2012 and 2013, any slight improvement is something to cheer for.

In April, the jump in non-landed homes sold was 17.6 per cent, a considerable 28.1 per cent higher on a year-on-year comparison with 2015. A total of 689 non-landed private units were sold last month. Property analysts are happy with the recent progress as it shows that the market is not completely dismal, and buyers will still bite if the prices are right. Resale private home prices similarly rose for 2 months straight, though the percentage were more modest with a 0.1 and 0.5 per cent increase in March and April respectively.

The residential developments which showed the most positive uptick were Twin Peaks in Leonie Hill, A Treasure Trove, D’Leedon, Double Bay Residences, Parkview Apartments, Thomson 800 and Carribean at Keppel Bay. The highest rise in home prices were in the core and central regions with a 1.3 per cent increase, while resale home prices in the suburbs fell 0.2 per cent.

Double Bay Residences SimeiAs the mid-year closes in, these 2 months may set the tone for the rest of the year, though much still hinges on how both local and global economies fare. Buying abilities and sentiments may follow suit.

Increased supply beginning to affect private resale condo prices?

There has been talk about private non-landed home prices being affected by the onslaught of new completed homes flooding the market this year. Could the supply-glut effect be already taking hold of the market as resale completed condo prices fell 1 per cent in March?

Bentley ResidenceFebruary and January were positive months for the private resale property market as prices rose 0.5 and 0.2 per cent respectively. Though the fall in March may seem a bit of a letdown, an overall dip was registered in all market segments. The largest decrement was for the non-central regions, where a 1.4 per cent fall was recorded.

Property analysts are expecting a 3 per cent fall in private home prices this year as the supply of completed homes continue to be met by competition from new launches and competitive pricing from developer-sold projects. Resellers of completed or older resale condominium units may face increase competition from developers who are now pricing newly-launched units are more palatable pricing. Buyers have also become more selective and are more likely to pay only for location. The total debt servicing ratio (TDSR) framework also limits the amount they can loan, thus putting a bit of a dampener on investment- or upgrading-based property purchases.

As the middle of the year approaches quickly, the next quarter will likely show the market response more clearly as more new launches are planned. How will the consumers react to the competition for their attention. Will sales volume increase significantly or will prices fall in the heat of battle?

New launches versus Completed private homes

As home supply inches towards a new high this year, the public’s attention may now be shifted to the competition between completed new homes and new developer launches.

Property investment was almost a sure thing not long ago, but now 3 to 5 years down the road from the peak of the market, when property prices were high but so were buying sentiment and potential investment yields, units which were launched then are now made available in the physical, adding pressure to the already-gluggy property market.

Private apartment prices in the core central region (CCR) have taken a turn for the better with a 0.4 per cent rise in the first quarter of 2016, following a 0.3 per cent fall in the last quarter of 2015. Luxury properties in the prime districts may once again be welcoming affluent buyers and investors as average unit prices have risen from $2,215 psf to $2,243 psf by the end of last year.

In the city fringes however, private property prices have continued to ebb, falling 0.4 per cent for 2 consecutive quarters now. Out of the central regions (OCR) and in the suburbs, prices fell 0.9 per cent. For the rest of the year, property experts are expecting private apartment prices to stabilise in the central regions while landed and suburban non-landed homes continue to struggle.