New properties on a fresh new ride

And hopefully it will be an upwards ride.

May 2014 was a good month for the new private home market. Mostly due to the large number of properties launched, 1,487 units were sold. But after that huge spike, sales have held steady at around 300 to 400 units sold per month, with December’s showing a little lower due to the festive season.

KingsfordWaterbayThe numbers have however increased significantly in March this year, from 390 units sold in February to 613 last month. The results are promising, but there has been a few recent launches of new units at previously launched developments and also a release of pent-up demand after the Chinese New Year festivities, which could account for some of the positive vibes.  Most of the sales came from Kingsford Waterbay with 155 units sold and Sims Urban Oasis with 107 units sold. New launches are pulling out all the stops to get buyers’ attention. Competition will be high as more launches are planned for the year, thus getting first dibs with the buyers’ pool is crucial for developers.

Suburban properties are often priced below city fringe and central district properties; at 22 per cent lower than city fringe and 43 per cent lower than central region homes. Lower quantum prices seems to be the factor helping to close deals, as the property cooling measures do not work in favour of most middle-income buyers. The Skywoods and Symphony Suites projects seemed to stacked up better, but sales at Northpark Residences and Botanique @ Bartley may very well give them a run for their money soon, looking at the response from the public.

The outlook for the market this year seems spotted, with possible glimmers of hope but also tough restrictions which may put a damper on sales volume and prices.

 

The private home gentle wave

It’s an up and down ride for the private non-landed property market for more than a year now. Across the board, non-landed resale home prices dropped 6.2 per cent last year. Prices of homes in the central districts dipped an average of 7 per cent last year, though there were good months when some segments managed to bounce back slightly before falling again. That could mean that things were mainly level though there are outliers.

Duchess ResidencesResale private apartment prices fell 0.2 per cent last month, with a 3.9 per cent fall compared to the same month last year. But some city fringe properties bounced back with an average price rise of 0.4 per cent. Part of the yoyo-ing in prices could be due to the Chinese New Year period in February and buyers were just coming back into the fray in March.

The second quarter of this year would be a crucial point in almost determining how the rest of the year will flow, at least up to just before the Hungry Ghost month. Though the ride has been more a gentle wave of price fluctuations rather than a roller coaster ride, property experts are however not expecting a drastic change in prices unless there are major policy changes or a major interest rates hike.

The year could be a relatively quiet one with bright sparks and dull moments along the way, but the basics of good location and lowered total quantum prices will still move units.

Private properties – Not all in the slumps

Recent figures showed that the property cooling measures have only really affected the luxury market, which has slipped into the red.

Even then, there are properties within the private property market which have not been as drastically affected by the measures and market slump. At Cote d’Azur in Marine Parade for example, prices rose by 4.3 per cent. Prices of resale units at Costal del Sol also rose 4.5 per cent. And for the new property market, in Chestnut Avenue, selling prices of units at Eco Sanctuary showed a promising increase of 4.1 per cent.

Eco SanctuaryAlthough this could be caused by developers choosing to release juicier units later in their launch schedule, enticing buyers to purchase at their latest launches, this nevertheless gives hope to the market. Buyers are still wiling to fork out the cash to get the units they want. And there is no lack of these savvy folks.

Naturally as with all market movements, effects are never seldom felt the same way across the board, there will be units with more potential than others. It takes a keen eye and a close followup of market trends to make a killing at the right time.

While this is good news for property developers and sellers, it raises the question of whether the property cooling measures have really been effective in making property purchasing affordable for the majority, or only instead stymied the inflow of foreign cash earnings in the high-end property market?

 

Are resale home prices stabilising?

After January’s dip in resale private property prices, February’s fall was considered slightly more positive. It was less steep for one, at 0.3 per cent as compared to January’s 0.9 per cent. Buyers have been waiting around for prices to slide further, but they seemed to have held firm. The prediction for January’s fall was originally 1.6 per cent.

Tre ResidencesLuxury homes took the brunt of the hit, with those in the city centre suffering an obvious softening demand. Suburban home sales remained level. Some of the market movements could be due to the lack of new property launches in February and the lack of activity during the festive Chinese New Year period.

Prices of shoebox apartments have been uncertain of late, as more have been completed are are now ready for the rental market. This in turn may have implications for the latter as competition runs high. Tenants now have fresh pickings to choose from and may have the upper hand when it comes to price negotiations.

In the months ahead, buyers and investors can expect a slight market shift, but not necessarily a significant one. It will be constant cha-cha between buyers and sellers and they try to suss out the other’s expectations.

Condominium prices wavering

It may be a year of fluctuations for the private non-landed property market. Condominium sales have been slow, though it picked up slightly in February.

Both new and resale private condominiums were affected by the market slowdown, much of it attributed to the TDSR (Total debt servicing ratio) framework set by the Monetary Authority of Singapore (MAS). But some property analysts are also connecting the dots between the lowered Cash-Over-Valuation (COV) prices of resale HDB flats. When COVs were high, potential HDB upgraders were able to leverage on these to leap into the private property market by using the COVs as part of the cash down payment for their new private homes. With the lack of this financial impetus, more are finding themselves in between an rock and a hard place when it comes to scaling up.

Sims Urban OasisWeaker buyers may find themselves having to hold back for now while those with the financial abilities will still be able to well afford what the market currently offers, and perhaps even more so as prices have been coming down for sometime now.

There has however, been a shift of interest from newer units to resale ones, in favour of larger floor area. HDB buyers have been purchasing units with an average of 926 sq ft in size, while private buyers leaned towards units averaging 1,119 sq ft in size. The sweet spot of affordability is now between $1.28 million to $1.46 million for private buyers and $950,000 to $1,09 million for HDB upgraders.

More foreign private home buyers

The number of Singaporean buyers of private properties have fallen last year. Possibly overshadowed by the increase in number of foreign buyers since rules have changed for Permanent Residents (PRs) buying HDB flats. New PRs must now wait 3 years before they are able to purchase from the public housing market. The rules have been in place since August 2013.

Marina ONe iprop watermarkThe percentage of PRs purchasing private properties in Singapore have risen from 15 to 18 per cent in 2014. But the number of Singaporean buyers have dipped almost by half. In 2013, 16, 789 homes were sold to Singaporeans while in 2014, Singaporeans only purchased 8,707 private homes.

Most of the foreign buyers were made up of Chinese nationals, Malaysians, Indonesians and Indians. 229 units were sold to Chinese nationals in the last quarter of 2014, up from 214 units in the third quarter. With the launch of the Marina One Residences, which is a joint venture between Malaysia and Singapore governments, Malaysian buyers were also active in the private property scene here. Over the course of last year, some 119 units were purchased by US citizens and 58 by Britons.

The number of PR and foreign buyers have remained steady for the past couple of years. Should this be a promising sign for the road ahead? And how can local private property buyers leverage on this?

HDB property market – Has balance been struck?

The last four years saw aggressive moves by the Housing Development Board to release and build new HDB flats. In 2014 alone, 51, 598 new HDB flats were added.

Has this supply of new flats been effective in stabilising the property market? Is the supply and demand scale now balanced? Minister for National Development, Mr Khaw Boon Wan, has mentioned that the increased supply has helped move the selling price of HDB flats down, yet at a gradual pace and margin which buyers are still able to stomach.

WEst Rock HDB FlatFrom this year on, the number of new HDB flats will begin to decrease, from 50,796 this year to 38,316 in 2018. Which could mean that this year might be the watershed year for the HDB market. Will buyers be taking the opportunity to purchase before supply becomes tighter once more? Or will the number of HDB flats which have been released thus far be able to provide for a stable resale market, keeping a level playing field between buyers and sellers?

As Singapore grows in population size, and global and domestic economies fluctuate, all this would also be tightly linked to population and immigration policies. With the election possibly coming our way next year, buyers may take the chance to look out for opportunities to upgrade property-wise this year, or perhaps wait and see what the post-election changes may bring.

Low sales for resale homes in January

With city centre homes leading the way, resale home prices seemed to be walking down the same path as the month before, with a dip of 1.7 per cent. Suburban homes’ decline was slightly less steep at 1.1 per cent and across the board, resale homes saw a 0.2 per cent drop in prices. On the bright side, city fringe properties did fairly well, with a 1.5 per cent gain.

The number of transactions were part of the reason for the drop. In January, only 282 private properties were sold, down from 363 in December last year. Other reasons include the loan restrictions and overall lower buying sentiments. With the festive season coming up in a couple of weeks’ time, the numbers for February may not see a drastic pick-up, but from March onwards, the figures will be telling of the year’s property market prospects.

6DeryshireAs the year goes on, industry experts are expecting buyers to pick up on the softening home prices and keep a quick eye out for serious sellers who may have potentially value-worthy offers. There are sellers out there who are still holding on to their asking prices as they wait out 2015. The year could be a tussle between the these two groups. Any extreme asking prices on both ends will be unlikely to do anyone any favours.

Currently, areas with the highest resale home value (Measured by the amount buyers were overpaying or underpaying) of $60,000 are Watten Estate, Novena and Thomson. In Bukit Panjang and Choa Chu Kang, the prices were a negative $31,000.

A major shift in dynamics this year could be caused by the higher interest rates which are likely to happen this year. Buyers may take that into consideration, together with the tightened loan limits, which does not give them much leeway in negotiations. Sellers who are eager to make a sale will do well to consider these limitations as well and understand that it will not be easy for their buyers to easily fork out additional cash.