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24 Apr

Foreign buyers back in the market

Have the cooling measures done their job in managing property prices? Foreign property buyers have held back for the last quarter,  but are now back in full force. Instead of aiming high for prime district properties, they have instead gone for cheaper options, namely suburban condominiums,

La Fiesta condominium in Sengkang.

La Fiesta condominium in Sengkang.

Foreign buyers made up 10.7 per cent of 4,884 private homes sold in Q1 of 2013. Chinese and Indonesians made up the largest numbers, followed by Malaysians. The number of Mainland Chinese buyers particularly has been on the rise once more. This could be partly due to the tightening of property buying policies in their own country.

Almost half of the 108 foreign buyers in March alone were Chinese nationals. With their strong buying power, even with the newly raised 15 per cent Additional Buyers’ Stamp Duty (ABSD), a private condominium of $1.53 million is still very much affordable in their books. One of the most popular suburban condominiums in district 19 was La Fiesta in Sengkang and in prime district 10, D’Leedon.

d'Leedon condo project on Farrer Road.

d’Leedon condo project on Farrer Road.

Before December 2011, when the ABSD was first introduced, foreign buyers made up 21.2 per cent of the total home sales. By the first quarter of 2012, the proportion has dropped to 5.7 per cent. The current level is at 10.7 per cent. Jones Lang LaSalle Singapore research director Ong Teck Hui has said that Singaporean investors seemed to be more affected by the cooling measures than PRs and foreigners.

In short, the additional buyers’ stamp duty has merely herded the buying crowd in another direction. Are they competing with local buyers? If there are sufficient private homes to go around, then market forces will keep the real estate machine chugging on its own. Does this answer what Singaporeans have been asking for in terms of housing prices and supply?

3 Apr

Fringe growth for City fringe homes

In terms of speed, the property cooling measures have certainly put the brakes on the growth of city fringe private apartments. Investors are not coming to the buffet table of apartments in areas such as Balestier, Thomson, Outram and Rochor, despite the substantial number of choice units for the picking.

Echelon condominium.

Echelon condominium.

The Urban Redevelopment Authority data indicated zero growth in the non-landed home prices for city fringe areas. City centre apartments on the other hand has increased by a slight 0.4 per cent. The higher stamp duty and tighter home loan limits have detracted many a property investor. In fact, growth in this sector in particular has be flattening since April 2012.

Spottiswoode SuitesSLP International’s head of research, Mr Nicholas Mak, thinks that part of the reason for the flat-lining sales could be that recent launches have been targeted at investors. These include Echelon near Redhill MRT station, Seasuites in Pasir Panjang and Spottiswoode Suites near Outram Park MRT station. Projects such as these has a significant number of one and two-bedders, which have been the hot favourites of real estate investors for sometime.

Have residential home prices in this area reached a saturation point and what will it take to get the buyers back into the market? Will there be spillover interest from the suburban private home market which is doing exceedingly well for the moment?

30 Nov

Are homes in Singapore truly affordable?

If you have always wanted to ask the authorities this question, will now hear what they have to say. In a grassroot dialogue on Sunday night, National Development Minister Mr. Khaw Boon Wan emphasized the Government’s commitment to providing affordable homes for Singapore’s future generations.

Do you think Singapore’s homes are truly affordable for the average Singaporean?

On the one hand, the nation is hoping to improve birth rates and push up the population numbers, but on the other, housing prices have been soaring above the capability of the average Singaporean. But Mr. Khaw says that the 25, 000 new HDB flats built per year over the past couple of years have more than provided for the 15, 000 marriages per year. He also said that “Pricing is within my control”, further taking up the responsibility of making it possible for citizens to own a roof over their heads.

With the rate at which property prices are rising and the constant increment quarter by quarter, are you positive that affordability is true of the current situation? And what about in five years’ time? Will homes be more or less affordable then as compared to now? How should affordability be measured, or what other factors should it be measured against? What about inflation and other living expenses such as education, transport, or simply the overall livability of the nation?

3 Jan

Looking back on 2011: Key Property Highlights of the Year

As we ring in the New Year, iProperty.com takes a look back to remind you of the highlights of the real estate market over the last 12 action-packed months:

1. Cooling Measures 2011

The additional cooling measures introduced by MND (Ministry of National Development) was by far the most talked-about topics within the property industry this year. These included the increase of seller stamp duty rates to 4 to 16% for residential properties sold within four years of purchase, as well as the lowering of LTV (Loan-to-Value) limits from 70% to 60% per cent for buyers financing two or more properties.

In November 2011, MND also shocked the market by announcing the increase in Additional Buyer’s Stamp Duty of 10% for foreigners purchasing private residential property.

2. Relief for The Middle-Class Masses

Those in the “sandwiched middle-class” had much to rejoice about this year, when MND announced that the income ceiling for buyers of HDB flats would be raised from $8,000 to $10,000, and from $10,000 to $12,000 for buyers of ECs (Executive Condominiums).

Other measures included the release of large numbers of BTO (Build-To-Order) flats, accompanied by a SBF (Sale of Balance Flats) exercise in September earlier this year.

3. En-Bloc Schemes a Plenty

Rochor Centre, Redhill Close, East Coast Road and Clementi Avenue 5 were all examples of the areas which were ear-marked for SERS (Selective En bloc Redevelopment Scheme) this year. While the sentiment of residents affected was mixed, a good many were most concerned about compensation and replacement programs – with some even writing some (very public) letters to voice their unhappiness, contributing to the extensive media coverage on this topic.

4. DBSS Sticker-Shock

While high property prices in Singapore are nothing new, the price tag of $880,000 for a unit at Centrale 8, a DBSS (Design, Build & Sell) project in Tampines proved too much even for the locals to swallow.

Very quickly, petitions from the public led to MND stepping in to freeze all land sales under the DBSS program. However, prices of Centrale 8 were eventually lowered, and DBSS sales soon continued into the year, with projects such as Lake Vista @ Yuan Ching, the first DBSS project in western Singapore, launched at more affordable prices, from S$360,500 for the smallest unit to S$680,400 for the largest flat.

5. ECs: the Hot Property of 2011

ECs were in high demand in 2011, with notable launches including the Arc at Tampines –which commanded higher average PSFs as compared to Belysa, the previous EC launch in Pasir Ris earlier in the year.

ECs particularly appealed to home-buyers whose income was below the revised ceiling of $12,000, and who wanted accessibility to condo facilities such as 24-hour security, a swimming pool and tennis courts.

6. Record-Breaking PSFs

Developers certainly had reason to pop out the champagne at their annual company dinners this year. Earlier this month, more 80% of the freehold Charlton Residences was sold, even before its official launch. New benchmark prices were also set at the preview of Thomson Grand in Upper Thomson, with PSFs for apartments topping a jaw-dropping $1,600 psf. EC developers also had much to celebrate this year, as mass-market EC projects like Blossom Residences enjoyed strong consumer demand during the first weeks of their launch.

23 Sep

Predictions for the Singapore Property

There seems to be a lot of volatility in the global equity market as well as Singapore’s. Indeed, in the two weeks following National Day, billions were wiped out.

Singapore property prices will continue to rise

Singapore property prices will continue to rise (image courtesy of thinkstock)

A piece of interesting news is that the Swap Offer Rate (SOR) has gone into negative territory. US Federal Reserve Chairman Ben Bernanke has made an unprecedented move by guaranteeing that the SOR, which is highly correlated to the US interest rate and exchange rate, will not go up for the next two years. This is truly risk free investing if you know how to take advantage of it. Well, one way I can think of is to refinance your mortgage to a floating SOR rate with a two-year lock on it, reviewing the global situation to repackage it two years later if necessary.

Another piece of news that has grabbed the headlines is the downgrading of US debt by Standard & Poor’s. This has resulted in Singapore, which has one of the few remaining AAA-rated government debts, being thrown into the limelight as a safe haven during these turbulent times. However I think that there is a treat of the Singapore dollar appreciating too much, which will affect its exports. Currently it is trading close to a never seen before rate of 1.2 against the USD. The upside is that it is combating inflation since Singapore is a major importer, but the downside is deposit rates will remain low and investing overseas will be challenging, which will result in savvy investors turning to local property, perhaps even commercial properties, instead of the volatile equity market.

Taking these two factors into consideration, coupled with the stamp duty penalty of 16% for the first year, 12% for the second year and 8% for the third year, recent buyers have the advantage of a booming property market. In the interest of maximising their profits without any opportunity loss, they are unlikely to sell in the next two to three years to avoid being hit with stamp duty penalty and low interest rates. Also, the next two years will see less uncertainty in the market; with the Singapore dollar appreciating and overseas investment opportunities becoming scarce, property will remain attractive as it is less volatile than equities, especially since demand still exceeds supply, given that foreign investors are eying this market as well.

Therefore, my analysis is that Singapore property prices will continue to increase over the next two years at least. However there is the potential that this will come crashing down if interest rates start increasing, as today’s buyers will start off-loading as a result of lower stamp duty penalty and an oversupply of homes.

 

2 Sep

Making a decision: EC or Private Condo?

The recent housing policy reviews have put the industry and home buyers on the spot. Many may still be dithering between both property types, and weighing the pros and cons. Let’s see if these figures will help you make your decision. Our focus this week is on one of the more idyllic areas of Singapore – District 18 in the East, consisting of Pasir Ris, Tampines and Simei.

What actual effect to property prices do new HDB BTO flat launches such as Tampines Leaf (image by HDB) have on private condominium sales in the same area (seen here is Pinevale condo on Tampines Street 73).

Executive Condos vs Private Condos in Pasir Ris and Tampines

Comparing the average price per sq ft of executive condominiums and private condominiums in Pasir Ris and Tampines, prices of the latter soar miles above, at more than double of the former.

Prices of Executive Condos in Pasir Ris and Tampines

Although prices of executive condominiums in Pasir Ris and Tampines seem on par, a close look will reveal that Tampines’ executive condominiums seem to be fetching slightly higher prices consistently for the past year. And as compared to July 2010, prices of executive condos have risen an average of $40 psf across the board, with those in Tampines seeing a rise of up to $50 psf.

Prices of District 18 Private Condos against National Average

Tampines, with its proximity to MRT stations, schools, offices, industrial parks, shopping malls, cinemas, parks and recreation amenities, is naturally a top choice for those in search of a choice home. Since May this year, the prices of ECs in this HDB town has risen month-on-month. HDB’s announcement of building more BTO flats in this mature estate does not seem to have affected buyers’ appetite for ECs here. New build-to-order flats were also launched in Tampines in May and July.

With luxury condos coming into the market and being quickly picked up by local and foreign buyers, the national average is raised. Though suburban condo prices in the these two areas have yet to hit the high note, they are certainly closing in.

30 Jun

Singapore public anxious about Minister Khaw’s next steps

Public pins dreams of property ownership on new Minister for National Development

iProperty.com.sg’s recent Quick Poll in June revealed that the market is anxious and hopeful that the new Minister for National Development, Minister Khaw Boon Wan, will help them fulfill dreams of owning an affordable property in Singapore.

Key findings from the survey revealed that:

  1. Most survey respondents (49.8%) hope the Ministry will embark on a building spree to flood the market with affordable housing, thereby slowing the rise in property prices even if this means dampening asset enhancement for current homeowners.
  2. A large percentage (39.7%) of survey respondents wish the Ministry will introduce means testing to determine the amount of subsidy potential home buyers can receive. This way, lower-income families will be more likely to afford housing.
  3. A small handful (10.5%) of those surveyed is supportive of additional Government-initiated policies that will further increase the value of properties to ensure homeowners’ current assets will be enhanced.

What would you like Khaw Boon Wan’s first act as the new Minister for National Development to be?

A total of 315 respondents comprising mostly Singaporeans, Permanent Residents (PRs) and expatriates took part in this online survey from 24 May to 27 June 2011.

Demand for residential housing remains high despite Minister Khaw’s promise to build a record 25,000 new flats this year and continue a heightened building pace for next year, which could result in the release of 50,000 new HDB flats in just two years.

However, with Minister Khaw still yet to unveil his master plan to quell the local red-hot demand for housing property, Shaun Di Gregorio, Chief Executive Officer of the iProperty.com Group, expects more anxiety to build-up until a new plan is announced, “The current set of cooling measures so far had some impact on the local housing property market, but the measures are not entirely taking effect. With home prices at an all-time-high at the moment, we can see that many home buyers are just focused on being able to find affordable homes, and this will remain a key concern for them until the Housing Development Board (HDB) makes up for the shortfall in the supply of affordable public housing for this group of buyers in the coming years.”

He added, “The recent news announced over the weekend that the average cash over valuation (COV) paid by home buyers in the April to June period had jumped 50 per cent over the last quarter is yet another sign that the last round of cooling measures and Minister Khaw’s recent blog comments had only dampened the supply while demand remains high and there are buyers who would continue to pay top dollar for HDB homes in popular mature estates.”