Private resale home prices inching up

Prices of resale private non-landed homes have been on the rise since March this year and the upward climb though gradual, shows promise and property analysts are hoping market sentiments will improve as the year moves on.

Qbay ResidencesLast month’s price rise clocked at 0.5 per cent and was apparent throughout all regions. In the core central region (CCR), prices rose 0.9 per cent and 0.4 and 0.5 in the city fringe and suburbs respectively. Sales volume has also improved 27.4 per cent in a year-on-year comparison with 754 units sold, just a wisp lower than the 763 units sold in May.

Buyers are beginning to be more acceptable of the market prices of resale units as the median X-Value (TOX) was at negative $7,000, $1,000 more than the negative $8,000 in April. While there are a few major launches planned for the next half to the year, the number of unsold units in the market has been expanding to almost 15,000, and about 57,500 private homes and 12,000 executive condominiums are in the pipeline. How will the market react to the release of these units into the market? Many new launches now face challenging times beyond their initial launch. Depending on the speed and volume at which new units are released and changes in interest rates will be determining factors.

Prices of suburban properties dipping

Prices of new properties in the prime central districts have been rising, even as the market dulls. Suburban homes are feeling the strain put on the market by the influx of completed new homes this year.

The PanoramaBuyers seeking out properties in the suburbs tend to be more price-sensitive, and are often hampered by the total debt servicing ratio (TDSR) framework and the additional buyers’ stamp duty (ABSD), leading to higher competition from an expanding pool of stock for a shrinking pool of ready buyers. Prices at The Panorama in Ang Mo Kio have fell 9.7 per cent since its launch to $1,213 psf and similarly in Clementi, units at The Trilinq are now priced around $1,408 psf, almost 9 per cent lower than its launch price.

In comparison, buyers of properties in the prime central districts are more affluent and are able to afford the prices properties here demand. For example at Robin Residences, selling prices are now hovering at $2,371 psf, 2.4 per cent higher than its launch-price. Buyers of centrally located properties also have stronger holding power and less likely to sell unless the price is right.

RObin ResidencesThe price gap between suburban and central district homes have been widening. Last year, CCR (core central region) new-home price premiums were 81 per cent over those in the OCR (outside central region). As more OCR homes hit the secondary market this year, how will smaller investors handle the competition?

 

Price drop in City fringe and Suburban properties

The global economic slowdown may have affected industries all around, as salaried employees whose jobs may even be in danger are now more prudent with their spendings. As these are the main target audience for suburban and city-fringe properties, these market sectors are a little worse for wear and both sales and rental prices have fallen.

A typical 3-bedder outside the central region may have fetch $3,800 in monthly rent a year ago, but now the going prices are hovering around $3,200. Competition in the resale market may also rise this year as investors who have purchase properties in 2011 will now be clear of stamp duties and may be putting their units into the market by the middle of this year.

Corals @ Keppel BayPhoto: Corals @ Keppel Bay

Luxury homes and central region properties may fare a little better, though resale private apartment prices have dropped 0.3 per cent in February this year. Most of the buyers of these high-end properties are high-net-worth individuals or funds who are capable of holding on to their properties through market troughs. Foreigners also make up a large proportion of the buyers here, with Malaysians, Indonesians and Chinese forming majority of the group. As Singapore’s luxury properties are still considered value-buys in comparison with the other popular Asian city, Hong Kong, where prices are 30 per cent higher and most properties are leasehold, those with the cash will continue to pick up deals, more of which are to be had this year as developers begin to offload their unsold stock.

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?