2015’s HDB resale property market

Following the hash of cooling measures implemented and enforced over the last couple of years, prices of resale HDB flats have been on the decline since 2014. The dip may continue this year, and into 2016 but at a manageable rate. A fall of 5 to 8 per cent is expected this year, similar to the last.

Sembawang Breeze HDB

Photo credit: HDB

A look back at the past decade will see a huge and quick rise of resale flat prices since 2006. Some flats were even looking at a 95 per cent rise in prices. Much of the price rise was effected by the COV (cash-over-valuation) system. Since its removal last year, prices have began to fall, though very slightly.

What are the factors leading to this fall in HDB resale flat prices?

  1. A increased supply of BTO (build-to-order) flats
  2. Lowered MSR (mortgage servicing ratio) with a loan tenure period limit of 25 years (down from the previous 30 years)
  3. Allowing singles to apply for 2-room HDB flats directly from HDB instead of on the resale market
  4. Making it easier for second-timers to purchase directly from HDB
  5. A 3-year waiting period for Singapore Permanent Residents (PRs) before they are allowed to purchase HDB flats

Sellers and buyers may have taken 2014 to get used to the new measures and the price adjustments certainly showed as such. But 2015 could be the year where buyers come back into the market as prices become more palatable, and transaction volumes may be boosted by HDB’s scaled-down BTO supply.

For sellers, the dip may not be such a bad thing, yet. The price decline is fairly gentle and with the current prices, they will hardly make a loss, just not as much of a gain as before. It could be a win-win situation for all if the timing is right.

Brisbane is the city to watch for 2015

Brisbane_800x530

Brisbane is the capital of Australia’s Sunshine State and the city’s property market is expected to take on a similarly bright sheen over the next few years.

Sydney and Melbourne have often been the star performers in the Australian market –Sydney grew 17.15 percent in the year to November 2014 and Melbourne’s property market increased 9.38 percent – but big questions are being asked about whether growth might slow.

Attention is now being directed towards Brisbane, which historically is about one or two years behind their Australian city cousins. Many economists are even saying it’s now roughly three years behind where Sydney is now and that Brisbane is set to play catch up.

After a period of moderate growth in the property market over the last five years, there are many reasons to suggest this might change. The population has spiked and there has also been little residential construction in the same period, which will put pressure on the market.

Demand for residential housing in Brisbane is forecast to exceed supply. By 2031, an additional 156,000 dwellings will be required, with 132,000 of these classified as apartments and townhouses.
Average annual returns have already been 11.9 percent over the past 10 years and the current rental yield of 5.33 percent is ahead of both Melbourne (4.42 percent) and Sydney (4.69 percent).

ANZ Bank’s chief economist Warren Hogan has said Australia is expecting another property price increase (15%-20%) in the next two years and Brisbane is tipped to be a property market leader this year.

It’s a view shared by All Property Solutions Singapore director Lyndon Fairbairn.
“Brisbane’s property market, out of all the property markets in Australia, is going to be the one to shine in the next two to three years and it is where the smart investors are buying right now,” he said.

“The population is ever-increasing, which is putting pressure on the housing market and rental prices, so buying now for the future will see good capital growth and high rental returns.”

One of the highlights of Brisbane’s changing property face is the Brisbane Skytower, a 274m-high, $1 billion skyscraper with 88 levels of residences. Located in Brisbane’s CBD, and overlooking the botanical gardens and a section of the Brisbane River, it’s expected to rival iconic structures like Singapore’s MBS, Melbourne’s Eureka tower or Sydney’s Sydney by Crown.

It will be the tallest building in Brisbane and reach the city’s height limit of 274m. It will feature Australia’s highest infinity pool at the tower’s crown as well as incredible recreation decks and luxury health club and spa.

A limited allocation of these apartments will be sold in Singapore, with APSS holding the exclusive rights in south-east Asia. The first batch will be available in Singapore on January 31, and it’s possible to pre-register with APSS now.

Brisbane recently hosted the G20 summit and Queensland is set to host the next Commonwealth Games in 2018. Brisbane last year adopted a new slogan – Give me Brisbane every day. It’s what savvy investors are saying, too.

 

This article has been contributed by APSS and for more information, visit http://www.apss.com.sg

Interest in Executive Condominiums wane

Just awhile ago, the interest in executive condominiums (ECs) was red hot as pent up demand for these sought-after properties was released after a long hiatus. In areas such as Jurong, which had not seen a new EC launch for 17 years, the response was promising.

This interest has however diminished very quickly. In the latest EC launch, only 18 per cent of the units launched have been sold. Out of the 378 units in The Amore EC in Edgdale Plains, only 70 were sold at its launch last weekend. Prices averaged at $800 psf. A similar property nearby, The Terrace executive condominium, which was launched earlier last month, has only had approximately 20 per cent of its 747 units sold at a median of $812 psf.
TheAmoreEC_1Photo Credit: www.amore-ec.com

Bellewaters EC in Sengkang and Bellewoods EC in Woodlands fared similarly, with the only development bucking the trend being The Lake Life EC in Jurong West. Most of the units at The Lake Life sold within the weekend of its launch in November 2014. The sudden demise of interest in ECs came unexpectedly as even within last year alone, there was a good 9-month wait before any new EC development was launched and a rise in sales figures after a long wait is the norm.

Property analysts are putting this slowdown on the increase supply of BTO (Build-to-order) HDB flats, declining resale prices which have made resale HDB flats more affordable and the 30 per cent Mortgage Servicing Ratio (MSR) which was implemented in December 2013.

Moving ahead in 2015, 10 more new EC launches are expected and sales may be slow as future ECs will require a resale levy tax and competition heats up within the same location. As seen by recent numbers, areas with a higher concentration of ECs tend to fare more poorly in terms of sales volume.

Re-zoning Geylang – Fewer residential properties

At first instance, this proposal may not sound promising, but it may actually bring good news for owners of existing condominiums in Geylang. The Urban Redevelopment Authority (URA) has recently announced a re-zoning of residential areas in Geylang for commercial use.

Rezi3TwoWhile this means that there may not be as many private residential properties in the area, the value of those which have already been built may appreciate as offices and businesses eventually move into the area. This proposal by the URA could be seen as mainly to facilitate the balancing of residential and commercial activities in the district. The over-building of residential properties in the red-light district could have a reverse effect and introducing more commercial properties and maintaining a suitable amount of residential properties in the area may in turn increase the rental yields and value of properties in its proximity.

With Geylang’s prime location putting it close to the city centre, Aljunied MRT station and the Singapore Sports Hub, rental yields here are already 1.5 per cent higher than those in other districts. With the area mostly made up of smaller land parcels, the likely tenants would be boutique developers and small businesses, with the possibilities of niche eateries and shops.

Some residents have however raised concerns over this re-zoning move as more commercial spaces here may mean an increase in the illegal and disruptive activities normally associated with this infamous district. What are the pros and cons of purchasing property in Geylang and does one outweigh the other?

New condominiums not spared from 2014’s lull

The stream of new homes entering the market has been continuous and more will be coming our way in 2015, with up to 2,500 units within the next two months. Larger new residential projects ready for occupation soon include the Sims Urban Oasis and Northpark residences.

Sims Urban OasisThis sudden increase in supply may not necessary affect sales prices, but the number of transactions may drop as buyers hold out in wait of what the rest of the year brings. In the last month of 2014, sales were lacklustre, with the best seller being Lakeville condominium with 16 units sold. This is followed by 13 units sold at Rivertree Residences and 12 at The Panorama. All are suburban mass-market private homes. Even the executive condominium market slacked a little with only 128 units sold at the 747-unit The Terrace in Punggol.

But the later half of 2015 may hold some promise as property prices may have corrected by more than 10 per cent and property cooling measures may then be lifted. Sellers may find themselves having to lower prices as competition heats up and buyers wait out as long as they can. It is just a matter of waiting for that sweet spot to hit the markets.

Rental market ended weaker in 2014

Compared to a year ago, the private residential rental market was on a slight downwards slope since last February, with the luxury property market taking the biggest hit with a drop of 1.2 per cent last month.

Parc Rosewood in Woodlands.

Parc Rosewood in Woodlands.

As most expatriates now have a reduced housing budget, properties which are asking for more than $10,000 in monthly rents may struggle to secure tenants quickly. And as the rental prices of properties in the city centre dips and closes in on the rental prices of city fringe homes, the latter may also be facing some fierce competition.

While suburban homes holding up better with their comparatively less expensive rents, the surge of 25,000 new homes entering the market by end 2015 may change the tune of things to come. Private residential condominiums which may be ripe for the rental pickings soon include Parc Rosewood in Woodlands and Eight Courtyards in Yishun.

When many units within the same property enter the market at the same time, property experts are expecting a price war which may benefit the tenants but not necessarily the landlords. As the private property market prepares itself for the upcoming increase in supply, one begins to wonder if the HDB market will benefit from this or will the rental prices there be similarly affected?

Private suburban properties faring better

 

For the resale private property market, condominiums in the suburbs seem to be faring better than those in the city fringe and city centre. While prices of city fringe and city centre apartments fell 1.2 and 1.1 per cent respectively last month, suburban resale properties rose 0.5 per cent. The sales volume also remained the same as November despite the expected lull due to the festive season.
Tre ResidencesBuyers are sharpening their skills at spotting good deals, and are going for units which will benefit them the most in terms of location and future value appreciation. Some buyers have even managed to secure purchases at $10,000 less than the market value of earlier transactions in the same development.

What are buyers looking for now? With the property cooling measures in place, the final selling price tag, including taxes and duties, makes or breaks the deal. Buyers are looking for lower price quantums, good locations and potential for future development in the district. Most HDB upgraders are also most likely to search for these suburban homes to stay close to their previous homes.

As 2015 moves along, and more homes become ready for occupation, will the interest for resale properties in the suburbs continue to burn brightly? Or will the spark wane and the market focus shift to other sectors?

Developers offer more direct discounts

If you’re looking for a good property deal, you could be hitting the market at the right time as developers are now preferring to offer direct discounts instead of indirect ones such as renovation and furniture vouchers and the likes. And the buyers seem to prefer that too.

In a bid to attract buyers back into the property market, developers have realised that with the prevailing property cooling measures, especially the tighter loan limits, it’s the final number that counts. Defraying the total costs through offers of furniture and renovation may no longer seem as attractive to buyers who are now keeping a keen eye on the total quantum prices.

HomeReno1Home buyers are more discerning and aware of how these indirect discounts affect the final sale price and more importantly, the total loan quantum they are able to receive from the banks. Though the rule which states that all discounts, even indirect ones such as renovation discounts and furniture vouchers, have to be declared when applying for a loan were in place since 2002, the banks have only recently been stricter about their checks. What this means for the buyer could be a lesser loan quantum as the amount give in indirect discounts are taken off from the final sale price of the unit, before consideration is given on how much the bank is able to loan.

Now, what developers are doing instead of offering renovation and furniture discounts, are to refurbish unsold units and selling them at a lower price than if the buyer were to purchase the furnishings themselves. Thus, the buyer gets a fully renovated unit at a slightly higher price than an unfurnished one, but at a lower price than if they were to renovate and furnish it themselves. This may be more cost-effective for buyers who are looking to rent out the unit as it saves them money and time.