Private resale homes – Dip in sales volume and prices continue

The number of resale transactions of private properties have dipped across the board and that in turn has affected the pricing index reflected by the SRPI (Singapore Residential Property Index). SRPI figures showed a 0.7 per cent drop in September, despite hopes that the market will rebound after the Hungry Ghost Festival.

STeven SuitesProperty analysts are reporting an imbalance in the expectations of home sellers and buyers. Stronger holding power of home sellers have meant that fewer properties were exchanging hands and they have instead opted to hold on to their properties till the market turns around. With the exception of shoebox apartments it seems. There was a price gain there of 0.4 per cent. This could be a clear indication of the preferences of buyers in the current market situation and perhaps provides an inkling of the months ahead.

One of the most affected property sectors are the luxury homes. Although buyers and investors of these high-end properties may not be detoured by the additional levies and loan limits, they may be deterred by the buying restrictions. And as the number of unsold luxury properties increases, developers are now offering discounts to entice them back into the fold.

As 2014 draws to an end, many may be wondering how the property market will fare in 2015. As the government has recently announced that the property cooling measures are not likely to ease in the near future, property analysts are expecting a 8 to 10 per cent decline. What will that mean for the overall market and will any particular property type stand out? Will the drop in private home prices mean a similar drop in HDB resale flat prices or will the demand for resale flats rise as more turn towards this less expensive option?

What carrots do Property developer dangle?

With competition heating up in the property scene, developers are finding it increasingly difficult to find ready buyers. The stakes are now higher and thus the incentives offered have been interestingly varied. From discounts to free furniture, rental guarantees, holiday and travel memberships; and even sports-car discounts and diamonds! The “carrots” may now be actual “carats”!

Mon JervoisQingjian Realty has recently offered one-carat diamonds in a lucky draw for Bellewoods executive condominium (EC) e-applicants. 20 diamonds for that matter. Buyers of the Highline Residences in Kim Tian road can look forward to a 3-year “lifestyle membership” which includes limousine rides and complimentary golf privileges at the Ria Bintan Golf Club. Most of the developers are offering these incentives as a way to market and spur renewed interest in their previous launches. These offers help protect their selling prices whilst balancing the expectations of buyers who may
have purchased units in the initial phases. Would this holding back on offers affect the response during first-phase launches? Whilst some may rest a little on their laurels and wait for possible offers in future launches, buyers who are keen to select their prime units may still prefer to strike while the iron is hot and go for first releases to ensure they get a unit they truly want.

At the Infinium cluster-homes in Kovan, IG |Development was offering a $200,000 Mercedes to the first 3 buyers but later withdrew the offer in place of price discounts of $100 psf on their first 3 units sold. That would mean savings of up to $500,000. But if it’s a vehicle you’d like, UIC and SingLand are partnering with Aston Martins to provide discounts on their cars for buyers of three-bedders and bigger units at Mon Jervois.

But as the supply of new homes may trickle come 2015, will developers continue to dangle these incentives or will the property market make a U-turn and head up the charts on selling price alone?

Housing supply to slow down in 2015

The authorities have announced that public housing supply and land sales will slow down come 2015 as the market has showed signs of cooling and stablising after the many rounds of property cooling measures rolled out over the past year or two.

West Terra HDB Bukit BatokPhoto Credit: HDB

The Minister for National Development, Mr Khaw Boon Wan, has commented in a blog post that the supply of new HDB flats will slow by 25 per cent next year. There will only be 4 launches next year, compared to the usual 6 per year. Each launch usually puts out up to 4,000 new Build-to-order (BTO) flats. The rate of successful BTO flat applications has been on the rise as reflected in the few recent launches. More married couples achieve success in getting their new flats, and the authorities have been allowances for couples either opting to apply for a flat with their parents, or for one near their parents. In addition, parents who opt to apply for a flat in a non-mature estate to be near their married children, will also receive priority.

The slight shift in policies may ensure that families remain close-knit and are able to receive help when needed. It may also help with a shift in aging mature estates and introduce a more age-balanced population per HDB estate. Mr Khaw Boon Wan also hopes that the move will help newlyweds plan for a family more efficiently and in turn increase Singapore’s population with a higher birth rate.

In the private property sector, the number of land plots being sold for executive condominiums and private apartments has already been reduced this year, though the industry might see a further reduction come 2015. But will this mean a decline in the building, construction and property industries? Or has the previous land sales and launches been sufficient to keep the industry going for the next few years? Which part of the cycle is the property sector in at the moment and are we set for a boom or lull in the next year?

EC options widen with new launches

Property market activity may be back on track as new EC launches inject some much-needed cheer. Bellewoods executive condominium in Woodlands just opened for applications last weekend. And this is after a year-long hiatus with the last major EC launch of Skypark Residences in Sembawang last September.

Bellewoods ECUnits at the Bellwoods were going at an average of $750 to $820 psf and industry experts are expecting prices to go up as construction and land costs increase. A change in policy earlier this year, with the authorities placing a 15-month time frame between the time a developer secures a land plot and the time they can begin selling. At the Lake Life executive condominium in Yuan Ching road, prices are expected to hover between $880 to $980psf. There is also worry that buyers who had originally intended to purchase an EC unit may by the end of 15 months, have received a pay raise and thus moving above the income ceiling which disqualifies him from being eligible to apply for one.

But despite these obstacles, developers remain ositive about the market response as pent-up demand may bring the crowd back despite the seemingly quiet market of recent months. There will also be another round of EC launches planned for the second quarter of 2015. Although there may be more options available, an oversupply seems unlikely as the government has reduced the supply of EC land this year. For the HDB upgrader, ECs now seems like it is truly fulfilling what it set out to do, to fill the gap between public and private housing.

When will property cooling measures cool off ?

The past two years have seen the implementation, and perhaps effects, of a series of property cooling measures. From increased stamp duties to revised subsidies and the strictest of which, the TDSR (total debt servicing ratio) framework, restrictions have certainly risen the heat on the property industry.

Singapore still has some way to go before the property market achieves the sophistication it requires to reach new heights. Economist are estimating the second half of 2015 as the earliest the authorities are likely to cool off with the cooling measures. That is when most households would have managed to reduce their debt levels. However, property prices can be expected to fall by more than 10 per cent in the first half of next year, or at least show a substantial decline before curbs are removed. In fact, by 2016, property prices are expected to fall by up to 20 per cent due to the oversupply at that time.

Prices have stablised somewhat since the implementation of the property cooling measures, but the fall has only be about 3 per cent, which means the authorities could be waiting for a significant fall in figures, or a recession, before amending the rules. The fear could be the sudden upward rebound of prices which may far surpass the watershed of 2009. With the elections coming in 2016, 2015 seems like the turning point for the market and buyers and sellers alike may be watching closely to catch any opportunities  they can before things change once more.

Could 2015 be the year for home buyers? How will landlords, developers and sellers fare?

Do upgraded HDB flats bring higher resale prices?

Given an older resale HDB flat in a prime location and a recently upgraded one in a less popular HDB estate, which would you choose?

HDB recently announced that they will be speeding up the Home Improvement Programme, the Neighbourhood Renewal Programme and the Selective Lift Replacement Programme. Some sellers and property agents are putting a higher price tag on flats which have be selected for such programmes. But with caveats.

HDB MUPPhoto credit: HDB

Only HDB flats whose owners have already paid for the upgrading may have an edge in the resale market. As the upgrading is usually only billed and paid for after the work is completed, some buyers may find themselves having to foot the bill for the flat or estate’s upgrading work if the seller has not already done so. Though it may seem like a significant difference, property agents are saying that it will not affect resale prices on the whole. The most it will do is slow down the price decline.

In fact, some buyers may prefer not to purchase flats which have yet been upgraded as it may bring inconveniences such as dust and noise for a significant period of time. Only flats which have been completely upgraded can command a higher selling price. But buyers who are thinking ahead may consider these older flats for the potential they hold once upgrading has been completed. With elderly-friendly facilities, newer amenities, perhaps even more room, the future could be more promising than you think.

Private property out of reach for HDB Upgraders?

If home prices are falling, most would think that the upgrade from public housing or HDB flats to the private home market should be getting easier. But it seems the opposite is true.

Prices of HDB flats and a private condominium apartment are perhaps softening at around the same rate, or that of HDB flats possibly even quicker. This creates a widening price gap between resale HDB flats and private condominiums, and HDB sellers can no longer depend on the sales proceeds of their HDB flats to balance out the price of their new private condominium.

BellewoodsECPhoto Credit: Bellewoodsec.com

Does this also mean that more HDB flat owners will now be forced to stay put and thus decrease the number of HDB flats available in the resale market? What about those who may have already purchase a private property and have a limited time period within which to sell their HDB flats? WIll they be pushed to sell at lower prices hence suffering the growing amount they need to top up?

Property experts are expecting ECs or executive condominiums to be the bridging properties between these two markets. As a hybrid between public and private housing, buyers qualify for public housing subsidies but after a 10-year period, can sell their units as private properties.  There is also the question of home sizes, will HDB upgraders be willing to settle for lesser space and a higher psf price to make the leap from HDB to private home?

Lakeside Wonder

Things in the West are heating up, especially with the launch of a number of private residential properties, announcements of a new Jurong Lake Gardens, a new retail and commercial hub Jurong Gateway and new transport lines. It’s a whole new township blossoming.

Prices of properties at Lakeside, a largely residential district, has been on the rise, significantly more so since 2009. Lakeholmz condominium apartments were only priced at $440psf in 2003. In 2009 and 2010 respectively, relatively properties such as The Caspian and Lakefront Residences were already costing buyers $580 psf and $1, 020psf. That is almost double in just a year’s time.

LakevilleOne of the newer launches is the Lakeville condominium and current median prices of properties in the area range at $1, 300 psf. Over the past 12 months, prices have ranged between $706psf for older establishments such as Lakepoint condominium to $1,263 psf at Lakefront Residences.

The new malls, businesses and regional offices setting up shop in the area has also brought along with it a new flow of tenants. Thus rental prospects are promising, especially for newer properties. Rental prices above $3 psf and at least 10 leases are signed at each residential property per month.

With a new land parcel up for bids in December, buyers looking to enter the market in the west side of the country could possibly have something to look forward to.