Resale private home prices fall in Q2

The first month of the second quarter ended with a slight fall in resale private home prices. The shift in the winds could be due to the higher number of new launches in April, with buyers’ attention turing towards new projects instead.

RiversailsOn a brighter note, demand for shoebox apartments seem to be on the rise, with consistently increasing numbers over the months of March and April. Figures for this segment are taken separately and have shown an 0.7 per cent rise in prices for these units with floor areas of up to 506 sq ft in April, following a 1.3 per cent rise in March. Property analysts are however wary of calling it a market rebound as the rental prospects for suburban smaller apartments are not yet on the road to recovery. Though there is a sense of the market picking up, most of the uptick have been focused on the developer sales segment. After a few months without new launches, buyers have returned to the new homes market with fervour, though most are in search of value-for-money deals targeted at property investment rather than on picking out units from the resale sector.

In the districts of 4, 9, 10 and 11, resale private home prices fell 0.5 per cent. Included in the core central region are the Central Business District (CBD) and Sentosa Cove. Prices of private non-landed properties have fallen 13.8 per cent since its 2013 peak and because of the debt servicing ratio limits placed on loans, buyers often have to be more selective of what their loans go towards. New properties are their product of choice for the moment.

With April’s price decline, could the bottom of the property cycle be in sight?

First private condominium launch in 2017 – Clement Canopy

Open for preview today is a new condominium in the west – on Clementi Avenue 1 to be exact. The 505-unit Clement Canopy is a joint venture between UOL Group and Singapore Land and the developers are hopeful about an uptick in demand, as shown by a pickup in new home sales last year.

The-Clement-Canopy-1Photo credit:

Situated in the Jurong Lake District – which is earmarked to be developed into the second Central Business District (CBD)– and with a number of schools such as the NUS High School of Mathematics and Science and the Yale-NUS College, this new condominium project will benefit from high rental demand. The 99-year leasehold development will consist of two 40-storey blocks holding a range of 2- to 4-room units. 194 out of the 505 units are 2-bedders sized between 635 to 732 sq ft and priced between $85,000 to $1 million. These smaller units are more palatable in terms of the total quantum price and also more in demand in the rental market.

The TrilinqOther bigger units include 3-bedders starting at $1.28 million and 4-bedders priced from $1.62 million. Selling prices are pegged between $1,340 to $1,360 psf. As a comparison, the neighbouring private residential condominiums, The Trilinq, is going for $1,400 psf but it is a tad nearer the Clementi MRT station; and Parc Riviera on West Coast Vale is selling at around $1,200 psf . There are no one-bedroom apartments at Clement Canopy and developers are hoping this will help differentiate their product from the rest of the market. Swimming pools and smart home features will be included in the project.

This year, the  would probably be all about timing. Launched at the right time, when demand is high and supply slow in stirring consumer interest, a new development could do very well indeed.

Continued decline of private resale condo prices expected

2017 has arrived and the question on every property owner, seeker and investor’s mind may be how the year will fare for them. Will interest rates rise and how will that affect their financial sustainability? Will vacancy rate fall and will there be an increase in resale units hence affecting price competitiveness?

casabellaThe last couple of months of 2016 has shown a continued decrease in resale condo prices. In November, overall resale condominium prices have fallen 0.7 per cent, following a 0.2 per cent in October from September. While central region private non-landed residential properties have regained some favour with foreign buyers, prices have dipped despite a rise in sales volume. Property analysts are expecting a market stagnation at best for 2017 as a quick rebound seems unlikely due to the continued slow economic growth and global political uncertainty.

The increase in sales volume is however a sign of hope for the property sector, as the rate of price decline may cease after a period of increased activity. Most sellers who are listing their units under the current market conditions are more likely than not serious sellers as most investors will try to hold on to their units and tide over the market lull. Thus buyers are increasingly aware of this change in tide and are negotiating for lower prices.

seletar-springsThe segment most affected could be the small suburban condominium apartments as the number of resale units are on the rise and also facing competition from HDB flats. While official figures are yet to be computed, analysts are expecting private property prices to have fallen by approximately 3.5 per cent last year.

Investors go for smaller freehold private apartments

Properties in prime town-centre district 9 have long been highly-valued and investment-worthy. Recent trends have pointed to increased popularity in smaller apartments in the district as leasing yields are higher and more frequent, possibly as the effect of the Additional Buyers’ Stamp Duty (ABSD) and Total Debt Servicing Ratio (TSDR) is lesser on these smaller properties.

Sophia Hill ResidencesRecent sales figures seem to indicate that location and exclusivity of properties in district 9 sufficiently triumph tenure and size. Freehold and 99-year leasehold properties seem to only have a $30 psf difference and in fact in recent launches, leasehold property prices have exceeded freehold property prices. In the long run however, freehold apartments hold higher potential and reduced risks.

Some freehold private residential developments in district 9 include The Marq on Paterson, Martin Residence, Liv on Wilkie, The Trillium, Reignwood Hamilton Scotts and Hilltops, just to name a few. The most recent addition to the 99-year leasehold properties list include Cairnhill Nine. Other similar leasehold properties in the area are Sophia Hill Residences, UP at Robertson Quay, Orchard Residences and Leonie Gardens.

UP @ Robertson QuayAs expatriates’ housing allowances shrink and as Airbnb becomes an increasingly common and popular choice for travellers, property investors are looking more into completed smaller, well-located units to start their investment dollar rolling sooner rather than later.

Smaller private homes popular with HDB Upgraders

Whether for occupation or investment, HDB dwellers moving into the private property market are setting their sights on smaller units below 100 sqm priced between $750,000 and $1.05 million. Median sizes of purchased non-landed homes have fallen to 85 sq m.

This could be a good indicator for developers and resale private condominium sellers of the pricing sweet spot in upcoming launches. Prices of completed transactions of non-landed homes have fallen 5.4 per cent. But private property owners who are purchasing within the market are snapping up bigger units of up to 110 sq m. This could be due to the fall in prices since 2013 and the affordable total quantum pricing.

Pollen&BleuThe number of foreign property buyers have also decreased slightly, with most now targeting luxury homes tagged above $5 million. In addition to Singapore’s political and economic stability, established infrastructure and education standards, value-for-money property options continue to draw foreign investors despite increased stamp duties.

As the market acclimatises itself to the new dynamics of the Total Debt Servicing Ratio (TDSR) framework, increased stamp duties and other property cooling measures, the buyers may gradually re-enter the market. With the promise of new launches coming up in then next few months, the numbers could see a turnaround soon.

New private homes still receiving buyers’ love

As expected, even in the real estate downturn, property buyers still know what’s value for their money and properties near MRT stations are always the first to draw the crowds.

The 845-unit Commonwealth Towers near Queenstown MRT station sold 175 homes in the first day of its launch alone last weekend. Most of the units sold were one- and two-bedders, which may signify a change in the buying trends amongst property investors. As buying power decreases due largely to the restrictions in loan limits, buyers are favouring smaller units going for a lower quantum price.

Waterfront@FaberPrices ranged from $721, 000 for a one-bedder to $2.2 million for a four-bedroom apartment. With its prime location, it goes without saying that most investors would be looking at renting out their units. And with its considerable proximity to schools, universities, hospitals and other amenities, this is a good spot to grab.

Waterfront@Faber over in Clementi won over some buyers with its more exclusive 210-units. Prices ranged between $1, 100 to $1, 250 psf. The minimum size for apartments here are 721 sq ft two-bedders. The largest are 2, 292 sq ft four-bedders. There are 11 strata-landed homes in the development, with the remaining 199 being apartment units.

Going by the loving buyers have shown these 2 recent launches, will upcoming launches such as the Coco Palms condominium in Pasir Ris, The Crest at Prince Charles Crescent and Amber Skye at Amber Road receive the same or heightened attention?

Condominium units – Cheaper but also smaller

Property developers are now more attuned to the needs and wants of their customers and as buyers become more price-sensitive in light of the weakening property market, they are careful to align their new properties to fit tightening pockets.

But the lower overall prices may not necessarily translate to a lower psf price. Whilst keeping that steady, the other variable which has to change is the property size. The larger-sized units were the first to shrink, with five-bedders now measuring an average of 1,569 sq ft instead of the previous 2,035 sq ft. Surprisingly two-bedders showed a significant resize of about 11.2 per cent. Two-bedroom units are now between 698 to 864 sq ft as compared to the older units measuring 703 to 973 sq ft.

Coco PalmsSizes of three- and four-bedders remained largely the same, in fact some even increased. These mid-size units are deemed more popular with buyers. As the Total Debt Servicing Ratio (TDSR) framework has restricted many from loaning enough to upgrade to bigger units, some who were once prepared to purchase five-bedders are now settling for these bigger three- or four-bedders.

As Singapore continues to grow and land becomes scarcer, it’ll be quite the miracle to see home sizes increasing. Thus it might be impractical to wait around for the impossible to happen, and the investment-savvy move could be to purchase when the time is right. As prices continue to drop, could the time be now?

Smaller homes take the cake once more

Shoebox apartments are back on the popularity charts. Chalk it up to the new home loan restrictions.

Instead of entirely deterring home buyers, the new loan curbs have instead steered buyers towards cheaper home options, in order to fit the smaller loans made available. And these cheaper options often mean the smaller homes, such as shoebox units or one-bedders. Smaller homes mean lower total quantum costs in accordance to the total debt servicing ratio (TDSR) framework put out by the Monetary Authority of Singapore.

eCO condominium in Bedok. Its developer, Far East Organization, has offered a 2 per cent furniture voucher to take the edge off MAS' latest home loan ruling.

eCO condominium in Bedok.

The lack of new units could also have contributed to the herding of sales towards the secondary market. 481 private home units were sold in July compared to the 1,806 in June. But that’s not to say demand has dropped 73 per cent. Only 557 units were launched in July, thus the 481 sold would mean a 86 per cent success rate.

Overall resale prices have risen by 0.2 per cent in July, according to the Singapore Residential Price Index (SRPI). In June, there was a 0.4 per cent drop. But with the other recent shift in housing policy for PRs, the further rise in private property prices may be quick and sharp. How will the resale HDB flat market fare in comparison?