Winds of change in local property market

A decade or so ago, owning a second or third property might be the fastest way to secure your retirement funds or to even accumulate a tidy little kitty. Investment properties were considered a surefire way of earning additional income, but in the climate of today, property owners and investors have much more factors to consider and competition to battle against.

SunshinePlazaResidencesWith the rental market weakening, property agents are finding that it takes twice as long and also many more viewings before a property is successfully tenanted. And even then, for much less than before. Some property owners have had to reduce rents by almost half. Leaving the units empty are simply not an option for some investors as the rents go towards the mortgage or mortgages of their properties. It is after all better to have less help than none at all.

SerangoonHDBflatFor new investors looking to enter the market, the environment is a lot tougher than before. Considerations such as whether there is a large pool of HDB flats available for rental nearby, the long-term potential of the property, competition from other new launches or even within the same property, whether the local and global economy will affect businesses and commercial hubs nearby thus reducing the pool of foreign tenants, and so forth.

Before the market makes a complete recovery, a possibly lengthy period of stabilisation will ensue, despite the governments having made some allowances in the are of the property cooling curbs.

Fierce bids for Perumal Road land site

A mixed-use land site on Perumal road which could potentially yield 200 private homes and an entire floor of commercial spaces have attracted bullish bids from property developers since its release in November last year.

Sturdee-Residence11 bids have been placed, the highest at 4.4 per cent more than the next in line came from Low Keng Huat at $174.08 million. The second highest bid came from China Construction (South Pacific) development. The keen activity in the land sales sector could translate into a competitive primary and thereafter secondary market which will in turn mean a ready pool of buyers who are ready to spend after the prolonged market lull over the past few years.

Average selling prices at this site is expected to hover around $1,700 psf due to the high land cost and also its proximity to the Farrer Park MRT station and other amenities such as City Square Mall and Mustafa Centre. The neighbouring plot where Sturdee Residences stands only lodged at $787 psf.

The lack of land sites available for sale in the earlier part of 2016 could have resulted in pent up demand from developers who are looking to replenish their lank banks in preparation for 2018 and beyond when market recovery is expected to happen. Property analysts are already seeing signs of market stabilisation and developers who prepare ahead of the recovery could just catch buyers at an opportune time.

 

Sparks of hope in property market

Despite the prolonged property lull, analysts are hopeful that a few sparks of recovery will begin to rejuvenate the market this year. The office sector may boost the commercial market while high-end luxury homes will hold up the residential property segment.

dleedonAs far as regions go, the core central region is heating up in terms of foreign interest in both residential and commercial properties. The sliding private home prices, by 11 per cent since 2013, have brought investors back into the luxury homes market. Currency valuation will however continue to play a part in the movement of investment money, and Singapore will still have to compete with other cities such as Melbourne, Sydney and Shanghai for investors’ attention.

Compared to other major cities such as Hong Kong, New York and London however, apartment prices here have fallen and will become more appealing to foreign buyers as the potential for yields in the medium term is considerable, especially as these specific market segment is expected to perform well this year.

skylineorchardboulevardThe collective sales market is another to watch in 2017, as developers are expected to collaborate to build up their store of land sites for long term yields. There might also be acquisitions of smaller developers by larger ones in order to participate in the government land sales programme. Property prices are expected to remain stable but depending on a property’s rental yields as a means of investment or profit could become less attractive as investors find it more difficult to find tenants in an increasingly competitive market.

Luxury home market shows signs of revival

The luxury property segment has shown strengthening signs of revival these past few months as units at high-end residential developments such as Leedon Residence and Goodwood Residence have been picked up at an increased rate, even without discounts, deferrer payment schemes or incentives.

GoodwoodResidencesAbout 70 per cent of the sales at Goodwood Residence were from investment buyers and the average selling price was at $2,300 psf. The property situated in Bukit Timah is developed by Singapore-listed developer GuocoLand and all of it’s 3 penthouses and 210 units have been sold. The penthouses sized between 3,900 and 9,600 sq ft were sold for between $6.5 to $14.23 million.

Over at the 381-unit Leedon Residence, with variety of 2- to 5-bedroom units, more than three quarters of which have been sold. Prices here are considerable as well, with most units going for only slightly lesser than $2,000 psf. Some 5-bedders have been sold for between $8.5 to $10 million. The remaining 100 or so units may be picked up by a group in a bulk sale.

Leedon Residence on Holland Road.

Leedon Residence on Holland Road.

Property analysts are holding back their optimism for a market turnaround as they chalk most of the sales up to value-for-money deals from the sector. Due to a subdued market, more opportunities for investors have popped up and while transactions of non-landed homes with prices of $2,000 psf and above have increased by 80 per cent, most of these investors are not banking on quick or huge returns. They may however be willing to and are able to hold on to the units for when the market makes a comeback.

Will home loan rates rise soon?

Low interest rates have been ruling the home loan environment for at least the past year. But how long more can this streak continue is anyone’s guess, especially as the current global economic climate is uncertain at best, what with the effects of the recent Brexit and US elections yet to be revealed.

Two golden idols carrying a red house with a "%" inconProperty analysts say that this may be the last chance for home owners to jump on the refinancing bandwagon as interest rates in the United States have been expected to rise starting next month, and similarly those in Singapore may also follow suit. Some loan packages may however have a lock-in period and borrowers may find themselves unable to refinance or having to pay a penalty for loan-cancellation or pre-payment. But there are a good many options out there and financial planners or experienced property agents will be able to advise on the best course of action for those looking to refinance their home loans. There are also data, website and apps out there to help borrowers who may want to do their research before approaching the banks.

forte-suites1The current financial climate is competitive and banks are also out to acquire market share, thus the competitive rates in the initial loan period could help shave a load of your ultimate home loan. Though the rise in interest rates is likely in the next 2 years, the climb will be gradual with the Sibor possibly doubling from the current 0.9 per cent to 1.85 per cent by 2018.

Resale private property prices slip further in October

Following the dip in resale prices in September, last month saw a further slip of 0.7%. Resale prices of private non-landed properties were apparently at a 50-month low.sycamoretreeSales volume of resale private properties also fell 15.2 per cent with 586 transactions clocked in October, in comparison to the 691 in September. In the peak of April 2010, 2050 units were sold, 71.4 per cent higher than the current numbers. September’s numbers may have been slightly more positive due to the pent up demand from the lack of major launches in the second quarter and the Hungry Ghost month in August.

Some districts fared better, with more than 10 resale transactions recorded – namely district 10 where the median selling price was $10,000 more than the computer-generated market value. But in most regions, sellers have found themselves having to offer prices up to $10,000 below the market value in order to close deals and attract buyers. In district 21 in fact, selling prices went as low as $23,000 below the market value.

HighlineResidences2Property prices in the city fringe, normally where selling and buying is the most active, have fallen 2 per cent. In the suburbs, prices also fell 3.3 per cent. Prime district properties however enjoyed a 4.9 per cent price increase, though it might only be sufficient to consider it a rebound from previous lull months.

New private homes with strong attributes still a draw

Amidst speculations of a bottoming-out real estate market, the 3 major project previews over the weekend might be good indicators of market fluctuations in the months ahead.

38-jervoisPhoto credit: Prominent Land

Judging from the strength of public response from recent launches, new private non-landed developments with strong attributes such as good locations, usually those near MRT stations and shopping malls, and affordable quantum prices will take market headlines for now. Buyers are not entirely shrinking away from making purchases, but they may be pickier as the choices available outweigh the current demand.

City Development’s (CDL) latest private residential offering of the Forest Woods condominium clocked an encouragingly positive level of sales in its recent launch, perhaps leading the way for the next few launches coming up – Queens Peak on Dundee Road in Queenstown, Parc Riviera in West Coast Vale and 38 Jervois in Jervois Road.

forestwoodsThe last of these projects is a rather exclusive boutique offering of 27 units developed by Prominent Land. At 38 Jervios, units range from 474 sq ft one-bedders to 1,098 sq ft two-bedders plus penthouse study with prices averaging $2,100 psf and up. Buyers can expect to fork out $1.08 million for a one-bedroom unit to $1,81 million for a 3-bedroom unit. 6 of the 27 units will be penthouses.

Although these new private homes may push sales figures past the 1,000 a month mark, property analysts do not yet expect a sudden market uptick as prospects of the economy remain lacklustre.

August’s Property market showing weaker

Buyers may have pulled back from the property market last month, partly due to the Hungry Ghost festival. In comparison to July’s bounty of developer launches, August’s numbers may seem pale.

Those who were looking would have only been keen if the prices were too attractive to pass up, and most buyers who have not already inked a deal in July may be waiting for the next few launches coming up in the last quarter of 2016. Non-Central regions property prices dropped 0.9 per cent, the largest in the 0.6 per cent overall fall in August.

highlineresidences1Developers have been offering incentive schemes and discounts for the last couple of quarters. And the buyers may now be more aware of these possibilities and thus are less willing to fork out higher amounts for completed homes as they know new fodder may be coming their way soon.  Small apartments below 506 sq ft have fallen the hardest at 4.5 per cent in a year-on-year comparison.

Long-term investment seem to be on the minds of recent buyers.  Properties in prime locations still hold their own and while buying frequency has dropped, properties in the central region are gaining ground and popularity with investors. The incline of fall in prices and sales has gradually eased and prices have remained relatively stagnant over the last half of the year, providing a sentiment of stability.