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14 May

Singapore’s Luxury home prices remain stable

In most countries across Asia, high-end properties are seeing a considerable rise in prices. Only in Singapore and Hong kong, where property cooling measures were implemented, did prices remain stable.

While luxury homes here saw a 0.6 per cent dip in prices, in other major Asia cities such as Beijing, Shanghai, Bangkok, Kuala Lumpur, Manila, Jakarta and Mumbai, prices leaped an average of 6.1 per cent year on year. Singapore is the only city where year on year high-end home prices fell, at 4.3 per cent.

Corals at Keppel Bay.

Corals at Keppel Bay.

Which city saw the largest jump in luxury property prices? Jakarta – with an increase of 8.7 per cent in Q1, that is a whooping 32.9 per cent year on year. Kuala Lumpur and Beijing saw steady quarterly rise in property prices as well. But it is worth noting that the Chinese government is quite aware of a possible property bubble and may be clamping down on building and investments soon. Jones Lang LaSalle‘s head of Asia Pacific research, Ms Jane Murray, is predicting a fall of up to 5 per cent for high-end property here in SIngapore. As population and economic growth slows, the same is expected of the property market.

Have investors veered away from Singapore properties to focus on real estate  elsewhere in Asia and are Singaporean investors doing the same? As property cooling measures continue to kick in, will they deter home buyers even further? What will it mean for Singapore’s real estate market and is this the intended purpose of the property cooling measures?

6 May

No quick-fix to managing HDB flat prices

So says National Development Minister Khaw Boon Wan.

Ever since the Government announced that new HDB flats will come at a lower price, HDB flat owners have been expressing fears of losing their nest egg should prices of flats drop. But as new flats are limited to only certain groups and limited in terms of type and location, will there necessarily be a drastic drop in resale flat prices and are we worrying too early? Though the number of resale flat transactions have decreased, prices continue to remain high. And there will always be those who wish to choose a flat of their liking in a location they prefer, as opposed to trying perhaps numerous times in the HDB ballot queue.

HDB Flats THinkStockMr Khaw reassured Singaporeans that while prices of HDB flat will only drop “a few per cent over the next few years”, but in the same breath said that the prices of HDB flats cannot keep rising forever. “If housing prices keep rising,it won’t be good. When I came into the MND (Ministry of National Development) two years ago, that was my target”. And much has been done since then, with the ramp up of BTO flat supply, changes in income ceiling, limits on HDB flat sizes, increase in number of allocated flats for both first and second-timers, and even allowing singles to buy new HDB flats.

During the recent Our Singapore Conversation (OSC) dialogue, the idea of selling back new flats only to the Housing Board was faced with much opposition. Homeowners naturally worry that their homes will lose  their value and cut them off from the profit they can earn by selling it in the open market. Mr Khaw admits that resale flat prices are difficult to manage as they are largely subjected to the market demand. SLP International executive director Nicholas Mak speculates that one way of gently letting resale HDB flat prices drop is to decrease the prices of new HDB flats in the same estate.

Forestville Executive Condominium.

Forestville Executive Condominium.

Recent debate also surround the Executive Condominium (EC) scheme\. While some have said that those who can afford an EC should not receive subsidies from the Government, the scheme was specifically initiated to help those who may not qualify for other HDB subsidy schemes. Thus should ECs still be considered a value-added profit-making asset for their owners?

26 Apr

The Battle of New and Resale ECs

Recent reports show that median prices of resale ECs have outperformed that of new executive condominiums. This is the first time resale EC prices have overtaken that of new EC units. Prices of executive condominiums across the board have risen over the past 2 1/2 years. Westmere EC in Jurong West has seen a rise of up to 40.6 per cent in median prices and Parc Oasis has increased 35.8 per cent in merely 2 years. There are 18 ECs in the whole of Singapore and 92,38 per cent of the 9,130 units available in the market has already been sold.

Parc Oasis condo in Jurong East

Parc Oasis condo in Jurong East

Surprising? Perhaps not. Property consultancy Jones Lang LaSalle proposes that the sheer number of new exec condo units being put up on sale in recent quarters have made pricing of new units more competitive. New units usually fetched a higher price as they had the maximum number of years left on the 99-year lease and everything came new and fresh.

What could be the reason for this recent takeover of interest on resale ECs? Location is the most likely factor. For example, Bishan Loft which is situated near the Bishan MRT station xceeded the $1,000 psf media price in Q1 this year. Another reason could be that new ECs cannot be sold until after the five-year minimum occupation period and thus have yet to enter the market.

Bishan Loft.

Bishan Loft.

Executive Condominiums (ECs) were a category of housing, a hybrid between private and public,  set up by the Government in 1996 to help the sandwiched class who neither qualified for public housing nor had sufficient money to enter the private property market. But perhaps the question we now need to consider is, where do the sandwiched class really lie? Can most of them now afford private, especially since there has been a considerable increase in the number of new units put on sale, and the line between private and executive condominiums are now sinking deeper and deeper into a grey pool or uncertainty?

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?

22 Apr

Bought landed property. What did you really land?

With the rise of high-rise properties in Singapore, landed homes are becoming very much the rarity it is. But surprisingly, you can still buy a landed home for as little as $2 million, which is in the same range as a condominium unit in the suburbs. In Geylang and MacPherson, there are a number of landed properties tagged with that price.

Freehold or Leasehold? What other criteria would affect the price of landed property? Belgravia Villas in Ang Mo Kio.

Freehold or Leasehold? What other criteria would affect the price of landed property? Belgravia Villas in Ang Mo Kio.

According to URA’s real estate data, at least 10 freehold landed properties were sold for under $2 million last year. The cheapest was a 1, 841 sq ft property in Geylang which went for $792,000. That is $392 psf for you, less than half of some suburban condominiums. But these finds are few and far in between. Usually the plot size of these landed homes are smaller, such as a 893 sq ft terrace house in MacPherson which sold for $1,133,000. One of the rarest sales last year was a landed home in the prime district 10 on King’s road. The terrace was sold at $800,000.

But since sale of landed properties are limited to Singaporeans (foreigners are usually not allowed to buy landed homes), prices and demand are surprisingly lower than you think. Landed properties are valued mostly for the land alone. Thus size definitely matters.The condition, age and location of the property all come into play as well of course.

Jansen cluster terrace homes in District 19.

Jansen 8 cluster terrace homes in District 19.

Landed home prices rose 7.3 per cent in 2012; as compared to resale freehold condominium prices which rose 2.3 per cent. Leasehold suburban condominiums rose 3.4 per cent in the same period. Property agents and industry players have been seeing a rise in the number of landed home buyers within 35 and 40 years old. Previously most buyers are above 40 years old.

So if you find a good landed property deal, could it be too good to be true? Perhaps.

There are a number of hidden costs to punch into the calculator before you sign on the dotted line.

  • Land size
  • Age of the property
  • Condition of the property
  • Location
  • Parking spaces
  • Quality of the neighbourhood
  • Restoration and renovation costs

One should also take note of the number of years remaining on leasehold properties. Since demand in the resale market for properties with limited number of years left on the lease might lower the selling price quite substantially.

16 Apr

New private homes sales may match 2012′s high

D'nest condominium.

D’nest condominium.

If anything, worries about the property cooling measures affecting the property market in a big way should be allayed, for now, by the way Q1′s new homes sales figures go. March’s sales gave it a big boost, as buyers returned after the Chinese New year  lull in February. Many buyers were first-timers, and out of the 5,564 units launched in Q1, almost all (5,533  units) were sold.

Property developers had kept launches out of the market in February, and the release of numerous new properties near MRT stations in March could have made up for the pent up demand from buyers who flooded the showflats and new property launches in March, snapping up units in new suburban condominiums such as D’Nest, Urban Vista, Bartley Ridge and Sennett Residence.

According to the Urban Redevelopment Authority’s (URA) data of new home sales, March alone saw 2,793 units sold, breaking the previous record of 2,772 in July 2009. It goes to show that despite the cooling measures, demand is well ahead in the race to balance property prices and inflation at large.

Shoebox apartments were top sellers for HDB upgraders. Seen here is the Bartley Ridge condominium.

Shoebox apartments were top sellers for HDB upgraders. Seen here is the Bartley Ridge condominium.

Property analysts are however not expecting similar sales numbers this month, since March’s bumper crop of new units would have satisfied the pent up demand from previous months. D’Nest emerged the clear winner with 699 units of its 912 units sold. Once again, location and proximity to transport were cited as top reasons for great sales.

11 Apr

Tighter rules on property specs to help protect buyers

The showflat looks great and so did the photos you saw in their brochure. But could you be getting less than what you bought? Much less?

The authorities here are tightening up on rules surrounding grey areas and misrepresentations by property developers and sellers. Developers who play with numbers when pricing the property, or intentionally mislead the buyer on the amount of usable floor space they will eventually possess, will be severely dealt with by law, with stiffer fines, penalties and even jail terms and sales suspensions.

Do showflats really provide a clear picture of what you will get? Photo courtesy of ThinkStock.

Do showflats really provide a clear picture of what you will get? Photo courtesy of ThinkStock.

Developers now have to reveal all discounts, including vouchers of any sort and stamp duty reimbursements. Showflats will also be required to show the exact space of the finished unit. Where previously some show units have used higher ceilings and glass panels where brick walls should be to create a sense of space, they now have to follow strict guidelines so that buyers will know that “what they see is what they get”.

This most recent move by the Government on improving the Housing Developers (Control and Licensing) Act is a positive step towards creating a more professional property and real estate industry, plus a necessary safeguard to provide buyers with the appropriate tools and paths for legal redress on one of the most expensive investments in their life. The bill was passed through Parliament on Monday.

2 Apr

What does Q1′s slow private property growth rate indicate?

A cooling real estate market? Perhaps. But not by much. Of course, we do have to give the cooling measures time to work. But if we go by the response from the previous rounds, it may not do much. Although the pace has weakened somewhat, a 0.5 per cent growth as compared to the 1.8 per cent jump in the last quarter, private home prices still reached a record high.

QBay Residences

QBay Residences

Private non-landed suburban homes alone showed a 1.7 per cent rise, still a rise, but well lesser than the previous quarter’s 3.8 per cent. Property analysts are expecting further effect from the cooling measures to kick in this year, maintaining home prices at the current levels.

In the HDB flat market, resale flats may expect a fall in demand as singles will be allowed to purchase new Build-to-Order (BTO) flats directly from the Housing Board come July. The bumper crop of new flats being rolled out within the first 3 months of 2013 alone has also taken away the need to purchase from within the resale market. The quota plus the lowering of home loans to 30 per cent of a borrower’s gross monthly pay, 40 per cent if receiving a HDB home loan, has also taken some wind out of the sails. PropNex cheif executive Mohamed Ismail is however still expecting a rise in resale HDB flat prices, of between 4 to 5 per cent.

The Singapore Real Estate Exchange has reported a fall of HDB resale transactions from 4, 635 in Q4 of 2012 to 3, 028 in Q1 of 2013. The median COV prices have dropped by very slightly, from $34, 000 to $33, 000. This may not be quite the comfort buyers are hoping for, especially since resale prices have risen to an average of $457,000.

This could be the time to suss out potential long-term investments in the private property market as many developers are dangling carrots in the form of discounts, rebates and other incentives in order to secure more sales. Recent launches at D’Nest and Urban Vista have also boosted sales. The authorities seem more determined this year than ever to help tame the roaring property lion, but they will need to give property curbs some time to take effect before deciding their next move.

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