Authorities not ready to ease property curbs

The property industry has been hoping for a respite from the several rounds of property cooling measures rolled out over this year and the last. But the Monetary Authority of Singapore (MAS) managing director, Ravi Menon, recently said that even though home prices has ease somewhat and has leveled the playing field slightly, there are still risk factors which prevents them to being able to release their hold on the reins.

Home prices have risen an astounding 60 per cent from 2009 and over the past year, it has only fallen 3.3 per cent. Though it is quite impossible for home prices to fall to the level before the 2009 boom, they are hoping nevertheless to keep the markets stable before easing the restrictions.

Singapore real estateThe measure which affected the market the most could be the mortgage loan curb. The TDSR (total debt servicing ratio) framework has put many buyers hoping for a home loan out of reach of their desired property. This has indirectly caused developers to shake a little on their footing and prices of new properties dropped slightly over the last 3 quarters. But property prices are still relatively high and the fear is that any relaxation of the current rulings might cause an upward spiral process which might be more detrimental in the long run.

Battling inflation has been one of the key issues for the country’s rulers and with housing becoming an increasingly crucial factor of nation development, the property market here would be largely linked to policy-making.

City Fringe wins once more

From Marine Parade to Novena to Kampong Glam, areas surrounding the busy city centre and central business districts are some of the best spots for property investments and this has hardly changed over the years.

The mixed-use development DUO at Ophir road was one of the latest offerings late last year. This year, another similar residential-cum-commercial project join their ranks – the City Gate on Beach road. But before these giant developments came into play, the Concourse Skyline condominium apartments were already in place. This 360-unit property was priced at $1, 590 psf at its 2008 launch. Despite 101 of its units remaining unsold, existing units have gone for as much as $2, 075 psf in the last quarter of 2013.

CIty GateWith the large number of incoming units from City Gate, which is targeting a price range of $1,900 to $2, 000 psf, these remaining units at the Concourse Skyline may be up for some fierce competition. Developers, Hong Fok Land, may experience some pressure to lower prices in order to meet the “All sold” status.

City Gate will sit on the site of the former Keypoint and will feature 188 commercial units and 311 apartment units ranging from one- and two-bedders to the increasingly popular dual-key units. Penthouses will vary in size, from 484 sq ft one-bedders to 1, 819 sq ft four-bedders. The wide variety of units will draw buyers with different intentions in mind, but with such a prime location, the only thing that might stop consumers in their tracks is the strict loan limits.

Orchard road’s West end revamp?

A little off the main stretch, but nearer the exclusive Botanic gardens and Tanglin stretch of sprawling private homes and foreign embassies, the West end of Orchard road looks set for a revamp as MRT stations and other area redevelopment plans are in the works for this spot.

The TomlinsonA MRT stop which is part of the latest Thomson Line is planned just next to the Camden Medical Centre and targeted to be ready by 2021. Now may be the time developers will consider expanding or redeveloping land and older properties around the area. There have been movements in the recent years, with the latest property being St. Regis Residences. Sales at this luxury property has not always been positive however. Prices of $4, 653 psf in 2007 have since almost halved to $2, 399 psf.

Older properties in the same area, such as Cuscaden Residences and The Tomlinson, however fetch a lower sales price, and may be more palatable to those seeking an investment. But due to the relatively large size of most apartment units in the area, it also narrows the target audience. Those who are able or willing to purchase properties here will be limited as it may be more difficult to rent out. At The Tomlinson, the average resale price is $1, 896 psf.

Will the new MRT line bring refresh the market even as luxury homes sales are on a decline? Will the possibility of future collective sales of older condominiums be an incentive to purchase now?

Varied market response to declining property prices

Home prices in both the private and resale HDB markets have continued to dip in the second quarter of 2014. In the first three months of the year, the decline was 1.6 per cent. Perhaps buoyed by the increased number of launched in Q2, the rate of decline was somewhat less steep at 1.3 per cent the quarter past.

Rezi 3 TwoBuyers who have been on the lookout for opportunities such as this may be happy to find that more than a few property developments have been offering discounts. Though the overall number of sales have picked up in the second quarter, mostly due to new launches, the private homes market saw a more obvious slowdown in both the city centre and suburbs. The drop was 1.5 per cent in the city centre and 1.1 per cent in the suburbs. Properties in the city fringe fared better with a 0.6 per cent drop, an improvement considering the 3.3 per cent dive in the earlier part of the year.

But there are those who are concerned about the longevity of their investment should they purchase now. The question they may ask is, is this the lowest prices can go? If I were to buy now, will the prices continue to drop? Though property analysts are doubtful that the prices will bottom out anytime soon, they are expecting the maximum of a 5 per cent decline.

As long as the supply continues at a steady pace, prices will not vary far from the current levels. Perhaps true change will only come with a shift in policies. Considering the elections will be here in a couple of years’ time, the time leading up to that might be a period of uncertainty.

Property cooling measures will remain for now

Ever since the Total Debt Servicing Ratio (TDSR) framework was implemented a year ago in June 2013, the home financing front has taken a big hit. But the authorities are not ready to loosen the reigns on the cooling measures just yet.

The Ministry of National Development (MND) is taking its role in “ensuring a stable and sustainable property market” very seriously indeed. Besides the debt servicing framework, it has also increased stamp duties on second and subsequent property purchases, coming down hard on speculative property-buying.

Eight RiversuitesConsidering the fact that home prices have almost doubled in just four years’ time, the word ‘inflation” does not even cover the extent of the increase. With the rate of increase, especially in mid-2009, the authorities may be rightfully wary of the reverse effect should the measures be lifted now. Prices might very well rocket even higher and then there will be no bringing it back down. And that may impact the social and economic tensile strength of the young nation.

On the other hand, the interest rates at the banks are low for now, and it is an incentive for taking out loans. But with the TDSR framework, how many qualify for these loans and will Singaporeans now look outside of Singapore to invest instead? How will that impact Singapore and her plans to become a global city?

Bijou – Far East Organization’s first Dual-key SOHO

Whether you’re looking for a place to call home or seeking out the best property investment deal, location and design are often top of the consideration list. Thus, when something comes along that has both, savvy buyers will naturally gravitate towards it. The latest property by Far East Organizrtion – the freehold Bijou, is one such property.

Though dual-key apartments have been in the limelight for sometime now, most units have a separate smaller area with its own entrance but without its own facilities such as a kitchen and toilet. Bijou’s dual-key apartments however, are designed much like the much-desired maisonette, with one entrance but entirely distinct living spaces upstairs and downstairs, each with their separate kitchen and toilet. It’s extremely suited for rental since it maintains your and your tenant’s privacy. It’s almost as good as buying one condominium unit but owning two, without having to pay additional stamp duty and taxes.

Bijou1Combined with their french-inspired garden landscapes and rooftop garden views of the city, this exclusive 5-storey residential development only has 24 of these dual-key units in its 120-unit, which makes it all the rarer. Entering the market as the first dual-key SOHO, the freehold Bijou is located in one of the fastest-rising areas under URA’s latest Master Plan 2014. With the development of the Greater Southern Waterfront and the regional commercial hubs in the Pasir Panjang district, the influx of a burgeoning workforce seems more than likely. Traveling to the Marina Bay Financial Centre will also be much quicker, and as a mixed-use development, Bijou will also have retail and dining options right at its doorstep.

As the Singapore landscape changes in big ways, so will the property market and areas which have once been put on the back burner will not come into the forefront.

Luxury apartments – Leased instead of Sold?

As the property market lull continues, developers of luxury properties are finding the going all the tougher. As the number of unsold units loom large in the horizon, some property developers have considered turning their private condominiums into serviced apartments instead.

iLiv@Grange

iLiv@Grange

The only other options are for those with deeper pockets to hold off their launches till the market turns around, or to offer steep discounts. Ardmore Residences is just one of the possible few luxury residential developments whose launch has been held off. Wealthy investors do not seem to be keen on hopping on the market for now, probably in lieu of the tightening measures placed around the housing and finance sectors. Since its completion last year, developers have chosen instead to lease out units at the Ardmore Residences for approximately $25, 000 per month. The Sculptura Ardmore condominium nearby has also not been launched.

Sculptura ArdmorePhoto credit: SC Global.

Although some marketing has been done for the iLiv @ Grange apartments in Grange road, it has not been officially launched as well. At its unveiling in 2010, developers were targeting selling prices of $3, 000 psf. But in the current market, that figure might be unrealistic. There has been talk of the developer, Heeton Holdings, possibly selling the units in bulk to a single buyer at $2, 200 to $2, 300 psf. Developers generally have a window of 2 years after completion of the project to sell off the units. Remaining units are not allowed to be rented out. Since Singapore may require more hotels and short-term accommodation, it may be a new venture should these luxury residential projects near the city centre to be converted into serviced apartments.

Resale HDB flats prices dip

The number of resale HDB flat buyers is diminishing. At its two-year low last month, the number of flats which exchanged hands in May was 1, 320. In April, 1, 484 resale flats were sold. Prices also fell 1.2 per cent in May, the lowest since April 2012 according to the Singapore Real Estate Exchange’s (SRX) price index.

Marsiling Greenview BTO HDB FlatThe most common reason for the drop was the loan curbs. This has prevented many buyers from securing a desired loan amount, thus unless they have a large enough cash reserve, it usually puts a resale flat out of sight. The number of transactions in March and April were more positive but that could be due to the pent out demand following the festive season in January and February. Other possible reasons for May’s drop could be the release of new BTO and SBF (sale of balance) flats by HDB in the same month. The latter SBF flats are usually more popular with location- and price-conscious buyers as they are cheaper than resale flats but yet are situated in mature estates.

But what about HDB upgraders who are have purchased private properties? Unlike private property owners who are not allowed to purchase HDB flats, HDB flat owners are allowed to purchase private properties. But as buyers play the waiting game, resale flat owners are now simply willing to wait, if they can, or rent out their HDB flats. This in turn keeps rental supply high, but that also means they will be likely to compete with private property rentals. As the supply of tenants are kept stable, this could also mean there will be a price-war in the rental market.

How long will the resale market remain weak? Will it be a tough uphill climb?