Private resale property market to cruise on status quo

2016 proved to be a roller coaster year for the private home market, as prices fluctuated throughout the year but never quite settled into an upward swing. Price increases lasted hardly a quarter before turning the opposite direction and movements differed between regions as well.

SeletarParkResidencesAcross the board, resale private home prices rose 0.1 per cent. Most of the increase were for properties in the prime districts. Prices here rose 1.8 per cent while falling 0.9 per cent and 0.4 per cent in the city fringe and suburban districts respectively. Location continues to rule buyers’ decision-making process and prime district home prices remained stable despite the year-end lack of market activity.

As the rental market continues to wane and competition from completed properties put further pressure on rental prices, more private condominium unit owners may be pushed to sell this year as they come to the end of their 4-year holding period, after which they will have to foot their sellers’ stamp-duty bill. Buyers of resale units could have the upper hand when it comes to negotiations in these cases.

NathanResidencesThe number of private apartment units sold have been falling as well, with 484 units sold as compared to the 618 sold in November. Though the numbers are higher than the 453 units sold in December 2015, it is still a far cry from the 2,050 in April 2010 – a 76.3 per cent fall in fact. Property analysts are expecting prices and sales volume to maintain their current levels, though 2017 could be more a year of keeping the status quo than quick recovery.

Rents down but sales of some projects up

Home rental prices have been slipping with a 0.4 per cent and 0.5 per cent fall in the private non-landed apartments and HDB flats markets respectively.

Cairnhill Nine CapitaLandPhoto credit: CapitaLand

But perhaps the decline in rent has increased rental volume. There was a 8.2 per cent increase across the board in rental volume with 3,686 units leased this October as compared to 3,408 from the same month last year. On the same year-on-year comparison, rental prices were however down by 4.5 per cent.

The increase in rental volume may also be reflected in the sales volume this quarter as stronger home sales may have lifted earnings for some developers. CapitaLand for example saw a 28.4 per cent rise in net profit in Q3. Locally, their private residential projects, The Nassim and Cairnhill Nine, have boosted sales, together with their new projects in China – namely Riverfront in Hangzhou, New Horizon in Shanghai and Vermont Hills in Beijing.

nassimhillcapitalandPhoto credit: CapitaLand

In Singapore, they have sold 206 units in the second quarter, and a total of $1.24 billion in total sales value in the first 3 quarters of the year. With the happy increase in number of launches within the last quarter, sales volume may hit a positive note and ring in the festive year-end cheer come end December.

Rational decline in private home rental prices

Instead of a wild and dangerous free fall, the price decline in the property rental market has been encouraging in its lack of acceleration.

Property analysts say the “sawtooth” pattern in the fall of rental prices is understandable and manageable. There was a spike in rental volume in March due to the influx of foreign talents after the Chinese new year festivities, followed by a level performance in April which indicated a higher rental volumes for both the private property and HDB rental markets though leases signed now tend to be shorter than 6 months.

TheSoundCondoRents in the Outside Central Region (OCR) fell 0.1 per cent in April while that in the core central region (CCR) remained unchanged and in the rest of the central region (RCR) rental prices rose 01. per cent. In a year-on-year comparison however, rental prices have been falling, with a 3.9 per cent dip for HDB flats in mature estates and 5.4 per cent for private condominiums.

The rental volume was however 10.5 per cent higher than in 2015 despite a 10.3 per cent fall from March. Many new completed units were included in the 3,953 units were leased last month. The continued influx of completed new homes entering the market this year may dilute the tenant pool even further and resale units may find it even tougher to secure tenants as the year moves on.

High vacancy rate hits property rental market

The days of brisk rental demand for private apartments could be going as the high number of vacant private property units in the market reached a record 10-year high at the end of 2015. Rents have fallen 4.6 per cent last year and analysts are predicting a 6 per cent drop this year.

Cassia EdgePhoto: Cassia Edge condominium

With the sheer number of new condominiums and smaller units introduced into the market in the last five to ten years, the opportunities for investors with varying financial capabilities have expanded vastly. Many of them have purchased smaller suburban units for investment purposes but 2016 may not bode well for those looking for a quick turnaround in terms of resale or rental of these units. The number of new condominium units hitting the market this year will mean increased competition for a diminishing tenant pool which will squeeze rental prices downwards. Many landlords are already finding it difficult to find tenants with the same asking prices as before, and have found it necessary to lower prices by 10 to 20 per cent.

Districts 19 and 20, which includes Bishan, Ang Mo Kio, Hougang, Punggol and Sengkang, will have the highest number of new units in their midst this year – approximately 8,200. This is despite the fact that rental prices have not risen much in these districts over the past 3 years. Property experts are however positive about the huge redevelopment of the Seletar Aerospace park which may continue to provide the demand for rental units. In the eastern districts however, demand may be waning as expatriates working in the hard-hit financial and banking sectors could be leaving the country.

Rental properties face price-pressure

Vacancy rates for private non-landed homes may reach 9.6 per cent by the end of this year, up 1.8 per cent from 7.8 per cent at the end of 2014. Since the beginning of 2013, rental rates have continually fallen on a monthly basis, with the exception of January this year. Property experts are expecting a further fall in rental prices in these next couple of years.

Duchess ResidencesProperty agents have also noticed that tenants are now signing shorter leases of 12 months as opposed to the usual 24 months. Tenants may be on the constant lookout for better deals are may change units more frequently. The number of new private homes have risen exponentially, especially as previously sold units reach completion and are readying themselves for occupation this and next year. This year alone, 21, 800 new units will be completed. That is almost 84 per cent higher than the 11,865 units in the last five years combined.

On the brighter side of things, the volume of rental transactions may remain steady as the tenant pool seems to stay constant albeit an increased likelihood of tenants making their rounds in the rental market. That may also mean a higher number of new leases being signed.

As long as the tenant pool remains the same, and the supply of new private homes continues to rise, the pressure on housing rental prices and eventually sale prices is here to stay.

Home rentals – Record numbers in 2012

What could be the reason for a record number of 48, 000 leases this year? Does this signify a major shift in the preferences of home buyers and are more buying for investment purposes? Do more now own more than one property and will home rentals continue to reap in good profits in 2013?

Trilight

Median monthly rental prices for private condominiums have risen to $3.75 psf, driving tenants to look for smaller apartments. Luxury apartments however have seen a drop in rentals as corporate rental budgets may have been reduced. But as the number of new condominiums nearing completion rise, especially in the suburbs, will rental rates drop?

Industry experts are expecting an increase in the number of vacant units all across Singapore. The Urban Redevelopment Authority (URA) has mentioned a possible excess of 100, 000 units by Q3 and more than 35, 000 private homes will be ready by 2014.

Savills is however expecting a steady flow of rental yields with up to 49, 000 transactions as companies here continue to hire expatriate employees. Already more are leaning towards mass market homes in various districts around the island, veering away from the expensive prime district and city-centre options. Does this spell a possible change in dynamics in the property sector?

 

Get Property rental data from HDB and URA

Instead of grasping in the dark, potential property tenants can now look up rental prices on the internet at their own time and convenience, and narrow down their search by road, block and unit type.

URA’s real estate statistics are available on their website.

Monthly rental prices for both public and private housing will soon be made available on HDB and URA‘s websites and their aim is to provide timely information which will help tenants and landlords alike make better decisions before signing on the dotted line. Special care will be taken with regards to privacy protection and details such as level and floor will not be provided.

Is ths improvement on the transparency of information and data what property owners and tenants have been looking for? Will this aid with standardising rental prices across the board and will it have a positive effect on Singapore’s housing rental market?

Industry analysts think that  this move may not necessarily lower rental prices as the motivational factor is still demand. Rentals of both private and public residential properties are on the rise, at 0.9 per cent and 4 per cent respectively in Q3. Has the demand for rental units gone up in the past quarter and what are the reasons for the rise? Is rental truly the way to go as more new units enter the market but the population growth slows?