Property market slump continues

Resale home sales and rental prices have continued to soften as we reach the middle of Q3. July proved to be rather quiet for the resale private home market as prices reached a 21-month low, according to the Singapore Real Estate Exchange (SRX) figures.

LakevilleAs more new private properties reached their completion dates and entered the rental market, the number of units for rent increased, which caused the rental market to become more competitive. And as immigration rules tightened, the supply and demand scale tipped in favor of tenants. Rental prices were at a 38-month low last month. And the blow is felt not only in the private property market but also the HDB resale market with prices dropping to a 30-month low in July.

The areas with the largest price decline is the city center, with prices dropping 4 per cent. This is followed by the city fringe areas with a 1.1 per cent dip and the suburban districts with a 0.6 per cent drop. Property experts say that the drop in rental prices could be one of the reasons contributing to the slipping resale prices.

With property prices so closely linked to immigration policies in this small nation, how will the authorities balance the issues of housing and population?

Private home sales – Will the decline continue?

The property market has been softening. The decline seemed inevitable, especially as completed new private homes flood the market in the upcoming year or two.

Not surprisingly, shoebox apartments saw the largest dip in sales as the number of units are somewhat saturated. Buying power is also now lower and buyers who were initially looking at these units for investment may no longer be able to get the loans they need.

 

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Marina One residential project with 1,042 new condominium units. Photo by marina-one.org.

Rental issues such as the age, functionality and location of resale units now have to compete with the newer and sometimes faster property models. In the central districts, the decline in rents and sales of apartments were most evident. This could be due to the number of unsold high-end properties in these areas. Even suburban condominiums are feeling the heat as many expatriates shun them as they often do not provide the convenience and exclusivity they desire.

Whether the effect will transfer to the HDB resale market also awaits to be seen. As HDB upgraders who are moving to their completed units will have to let go of their HDB units within a specified time period, many may be in a hurry to let go of their units and possibly at lower prices than before as the market gets competitive. Pair this up with a diminishing market for smaller units as singles are now able to purchase new flats from HDB directly, as well as a smaller pool of permanent residents, the property market seems to be in for quite the turn this year.

Even as more new property launches are promised, how private home sales fare the next quarter may set the mood for the rest of the year.

68% drop in private home sales

In comparison to 2013′s Q1 home sales figures, the chasm is deep. And so are moods in the real estate market.

Private home sales have been on the decline for some time now. And recent figures are not exactly uplifting. Buyer sentiments are pessimistic, as the loan curbs implemented last year takes its toll on buyers and sellers alike.

Hillford Retirement Home
It has become much harder for buyers to secure loans, with the Money Authority of Singapore’s Total Debt Servicing Ratio framework in place. Buyers can no longer loan as much as they would like, which may place them just out of reach of their target property. The lack of new property launches this quarter has also dampened the mood somewhat. And property developers have been slow in introducing new units into the market as they are now accutely aware of a softer market.

Some properties nevertheless have beat the odds and continued to enjoy brisk sales. Topping the list is the 281-unit The Hillford in Jalan Jurong Kechil. Since its launch in January, units have been completely sold. Next up are a couple of neighbouring properties in Sengkang – Rivertrees Residences and Riverbank @ Fernvale. Most of the units went for an average of $1,000 to $1, 100 psf. Industry analysts are wondering if this could signify that buying power for suburban private properties will now hover around this ceiling.

Rivertrees condoThe rest of the year may see a tussle of prices between new and resale properties. As developers cut prices to make sales, resale home sellers may be forced to face the competition head on.

New Suburban home launches

It’s an exciting time for the suburbs as three new launches make their entrance, most of them in the North.

Nine REsidencesYishun welcomed a new mixed-use property, Junction Nine and Nine Residences. The residential units are selling at an affordable $1, 070 psf. The options are plenty, with 495 sq ft one-bedders to 700 sq ft two-bedders, 915 sq ft three-bedders, 1,001 sq ft four-bedders and 1, 173 sq ft four-bedders. Bigger units such as a 1,367 sq ft five-bedder and 1,550 sq ft duplexes are also available. Though the retail units were the best sellers here, as investors see their potential as residential properties rise in price but not necessary in sale numbers. Also, retail properties are able to skirt around the additional buyers’ stamp duty which has deterred some.

$400,000 one-bedders are available at The Inflora, a 395-unit condominium on Flora Drive. If it’s a dual-key apartment you’re looking for, here’s where to look as well. These units are often rare and hard to come by, thus if you’re looking for one for your extended family, it might be a good time to snap one up.

The Venue ResidencesIn Potong Pasir, there is the mixed-use development, The Venue Residences. There is a range of 495 sq ft one-bedders and bigger units to 2.142 sq ft penthouses. It will only be launched on Friday and prices are expected to hover around $1,450psf.

E-applications for executive condominium (EC) Skypark Resiences in Sembawang has also opened last weekend. Could this launch detract some from going for private condominiums?

 

 

More aiming for two-bedroom apartments

This is on the back of the recent property cooling measures and declining rental demand. Most investors have previously gone for one-bedders for the affordability and rental potential. But as the landscape changes under the bent of most recent adjustments in the real estate industry, market demand is now for two-bedders instead. Buyers are opting for this property type as they provide a better option should they wish to live in them instead of merely relying on their property purchase for rental purposes. Borrowing restrictions could also have played a big part in the change in the direction demand blows.

Urban Vista at Tanah Merah.

Urban Vista at Tanah Merah.

Property developers have also began reducing the number of one-bedroom units within a private residential development. For most suburban projects, two and three-bedders could be the most popular and numbered units. In prime units however, due to space restrictions and the high psf prices, the take-up rate of one-bedders are still high.

In a number of private properties launched only this year, such as Urban Vista, D’Nest, The Trilinq and Novena Regency, two-bedroom apartments were selling faster than one-bedders. Property buyers are apparently now purchase homes rather than properties. Meaning owner-occupation takes priority over investment yields. Two-bedders also have a lower psf prices with a more affordable quantum. In the long run, two-bedders are deemed more prudent investments against a weaker rental market as compared to one-bedders which may be more susceptible to market downswings.

CosmoloftThe dip in interest for shoebox units also shows in the slowed sales of units at the newly launched 56-unit freehold condominium in Balestier, Cosmo Loft. According to Urban Redevelopment Authority’s data, only 4 units were sold since its launch in June this year. In the previous couple of years, shoebox units have been all the rage, with one out of seven units sold in 2011 being a shoebox flat. Some of the most popular developments with shoebox units were Spottiswoode 18, Skysuites@Anson and The Interweave.

Does this shift in dynamics an early indication of the possible turning point of the Singapore property market? Is the bubble, if it could be called one, about to burst?

Suburban mass market home sales up 24%

Over the June school holidays, sales of new private condominiums have picked up speed, following the launches of J Gateway and Jewel @ Buangkok. It propelled new private home sales up by 23.8 per cent with 1,806 units sold in June alone. New private home sales have been increasing since April, with a 5.4 per cent increase in May but the quadrupled increase in June has caught analysts by surprise since sales are usually slower during the school holidays.

J GatewayNot only did the sales numbers rocket through the roof, the total number of homes sold exceeded the total number of homes which were put on the market. 1, 768 units were put in the market, according to URA’s data, but about 50 more were sold. But most developments which sold well were outside of the city centre and prime districts.

Top seller was the 99-year leasehold J Gateway condominium in Jurong East. All except one of its 738 units have been sold at an approximate of $1,486 psf since its launch late June. At Jewel @ Buangkok, units went quickly as well with 80 per cent of its 350 units. Median selling price was $1, 183 psf. Selected city centre properties which sold relatively well were Liv on Sophia. Since its launch in May this year, it has fully sold all its 42 units at a media price of $2, 400 psf. Executive Condominiums also helped boost sales with the recent launch of Forestville EC in Woodlands. 226 units have been sold thus far, at $730 psf.

Forestville Executive Condominium.

Forestville Executive Condominium.

Following such brilliance in June, would July’s numbers be lacklustre due to the newly introduced loan curbs? To counter this new measure, property developers might have more aggressive moves up their sleeves.

Private resale property – Home prices up

Ever so slightly. It could be a sign that Singapore’s property market is staying strong despite global fluctuations and repeated rounds of cooling measures.
Ecopolitan
The recent rise in home prices are mainly due to the 5.5% climb in prices of properties in the city centre, an area which saw a lull for the first couple of quarters in the year. Overall resale prices of non-landed private homes went up by 1.8% in in June, according to data by the Singapore Real Estate Exchange (SRX). Property analysts are careful to declare an overall rebound of the property market however, as the numbers may reflect a smaller number of transactions but at higher psf prices. Though this could indicate a continued rise in property prices, it may not be indicative of buyers’ sentiments.

But as more are coming back to the secondary home market, resale private homes may see a comeback yet. Increasing interest is in smaller city centre or city fringe units. Favored by investors, these properties have a higher rental potential and may be easier to lease for quicker, higher rents. This is despite numbers showing that rents have dropped 0.2 per cent since May, and it’s been five months of consecutive drops. Is this a sign that the market could be looking up in the near future and now is the time to buy?
 Three11

In the suburban home department, resale home sales have dipped somewhat, as more buyers were setting their sights on new properties launched in the recent months. Demand in new homes has been red-hot, as buyers and investors recognise the capital appreciation value of something new.

With the Monetary Authority of Singapore’s (MAS) latest move to rein in home loan financing, one awaits to see if sales transactions are affected, and by how much.

Resale home prices – Blowing hot and cold

Barely three months after January’s cooling measure, property prices are soaring once again, perhaps even more than before. In March, prices of resale homes rose 1.1 per cent, but April brought it up to second gear with a 1.9 per cent rise, according to the latest Singapore Residential Price Index (SRPI) numbers.

Aspen Heights condominium in River Valley.

Aspen Heights condominium in River Valley.

As per the current trend, suburban homes continue to make a more resounding impact on the market, with prime district properties growing at a slower pace. Growth is evident, nevertheless. It seems unlikely that property prices are likely to cool, at least not based on the latest round of property cooling measures which only saw an increase in stamp duty. This is barely enough to deter determined property buyers and investors any longer. The effect of January’s cooling measures on cooling the market is yet unclear, but from the numbers, it certainly seems like the impact is shallow and not very long-lasting.

R’ST Research director Ong Kah Seng thinks resale properties may do better than new ones because of its immediate value. Since there is no wait for building completion, rental income could be immediate and since they come with a lower additional buyers’ stamp duty, more buyers looking to invest in a second property will be inclined to purchase a resale property instead of one from a newly launched residential project.

New property Herencia on Kim Yan Road.

New property Herencia on Kim Yan Road.

In February this year, the number and prices of homes sold dipped for a month, partly also because of the Chinese New Year lull. But already in March, a rise is seen and it continues well into the second quarter of the year. The SRPI showed an increase in home prices particularly in the Outside Central Region (OCR). Properties in these areas jumped 2.4 per cent. Another notable increase is in the prices of smaller units. Units of 506 sq ft and less climbed 1.8 per cent in April. Although the seventh round of property curbs implemented in January were described as one of the most comprehensive since the series of cooling measures started in 2009, there is apparently a proportionately decreasing effect with the increasing number of cooling measures. Is there an end to Singapore’s home pricing saga or should we brace ourselves for a continued increase?