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In 2015, completed small apartments (up to 506sqft) have gone from the most resilient segment in 2013, to the worst performer in terms of prices. Central Region of Districts 1-4 and D9/10/11 declined by 3.6% and 3% for Non-Central Region for non small units. Islandwide prices index for small units dropped by 4.3%. Overall Price index dropped 3.3%.
Though Dec 2015 recorded half of the number of new private homes sold compared to the preceding month, this was not surprising as Dec is traditionally a lull period for property sales. For the whole of 2015, the sales of new private homes rose 2.9% compared to those in 2014, resulting in 7529 sales figures. This is despite that the number of new launches were fewer in 2015. This could signal a possible return of buyer interest to the primary sales market. However one may note that in 2013 a total of 14948 new homes were sold.
One in four private home owners will pay less property tax next year after the taxman marked down the annual values of about 73,300 homes. This comes on the heels of property tax relief for many owners of Housing Board flats, who saw their annual values cut by about 3 per cent earlier this week (annual values: property values every year using a mass appraisal system that bases the annual value on rents paid for similar homes nearby).
The slowing rental market has led it to reduce the annual values for 25.7 per cent of private homes, in contrast to the 2014 levy when only 2 per cent of private homes had their annual values reduced.
Some home owners said their annual values were skewed higher by neighbours who renovated their properties, raising the annual values for the rest of the street. Property taxes are also a sore point for some private home owners at the higher end of the rental market. This group says it has been paying higher levies since the Government introduced a more progressive property tax schedule at the start of this year.
Higher annual values should be a result of higher annual rents, but such properties are also more difficult to rent out in the soft real estate market. There are about 70,000 landed residential properties and 215,000 private high-rise flats here.
In the 12 months to March 31, property tax contributed $4.2 billion – 10 per cent of total tax revenue. Of that, taxes on private residences contributed $720 million, and Housing Board flats contributed $150 million.
EVERY few months, property industry players renew their call for cooling measures to be lifted, pointing to the sluggish property market.
The most recent suggestion came, albeit indirectly, from the Real Estate Developers’ Association of Singapore.
In September, it warned that if cooling measures cause consumer sentiment to decline too much, “there could be a broader impact on the economy”.
But it stopped short of calling for specific changes – unlike property developers in August, who did not hold back.
Each time the topic is broached, however, the Government reiterates its stance that it is still too early to do so.
Of course, the cooling measures will be relooked “sooner or later”, as National Development Minister Khaw Boon Wan put it during a Chinese news programme last week. There has been much speculation about when this might happen.
But apart from timing, there is another question about this eventual relaxation: Exactly which measures will or should be lifted?
A whole range of policies are referred to as “cooling measures”, but some are arguably important not just as short-term moves to bring a soaring property market down, but as basic safeguards.
Even if prices cool as planned, some measures may be worth keeping.
One is the 35-year cap on the tenure of home loans. At its introduction in October 2012, the Monetary Authority of Singapore (MAS) said it was part of the “broader aim of avoiding a price bubble and fostering long-term stability in the property market”.
In other words, it was important not just as an immediate cooling measure, but also as part of a more stable property market.
The cap was also meant to protect both borrowers and lenders.
The MAS noted then that low initial monthly repayments, made possible by long tenures and low interest rates, might lead borrowers to take a larger loan than they can truly afford, and to have the repayments stretch over a longer period.The number of residents aged 65 and over with outstanding private mortgages has almost tripled since 2008, reaching 15,506 this July.
While some may be financing investment homes and are not in financial difficulties, others may be in danger of being saddled with a loan they cannot afford to keep servicing. The 35-year loan tenure cap for private property should help avoid that situation.
R’ST Research director Ong Kah Seng considers the cap “a good measure to keep, irrespective of market conditions”.
Similarly, other cooling measures that keep homeowners from overstretching themselves should be retained for that purpose.
“Loan-related measures should be removed last, as these measures encourage financial prudence,” says OrangeTee managing director Steven Tan.
Take the Total Debt Servicing Ratio (TDSR) of 60 per cent, introduced last June. This means financial institutions cannot extend a home loan if prospective borrowers’ monthly repayments – for all their loans – exceed 60 per cent of their gross monthly income.
This protects borrowers from over-extending. It also reduces the risk of bank overexposure to bad loans by filtering out borrowers more likely to default, notes PropNex Realty chief executive office Mohamed Ismail Gafoor, who also thinks it should remain.
Playing a similar role to the TDSR is the Mortgage Servicing Ratio limit of 30 per cent. This is the proportion of gross income that can be used to service a loan for a Housing Board flat.
As it promotes financial prudence, it would make sense to retain this- at least in part – to ensure that buyers do not overstretch themselves.
In contrast to these cooling measures are those which seem to aim simply at reducing demand. These include the Additional Buyer’s Stamp Duty (ABSD), introduced in 2011 and increased last year.
Singaporean property owners must pay 7 per cent on their second property, and 10 per cent on subsequent ones. The duty is higher for permanent residents and foreigners, with the latter paying 15 per cent on any property bought.
Experts point to this as the first of the cooling measures that should be tweaked or removed.
As a tax on property purchases, it merely discourages buyers.
Administratively, removing ABSD is also the easiest move if the Government wants to adjust any cooling measures, notes SLP International Property Consultants head of research Nicholas Mak. It will not affect existing properties, unlike loan curb changes which have implications for refinancing, for instance.
After ABSD, the next cooling measure which could be relooked is Seller Stamp Duty, say experts.
Payable on properties sold within four years of their purchase, it aims to discourage speculation and “flipping” of properties. “In times of a downturn, the SSD can prove to be a double-edged sword, amplifying losses for investors who need to liquidate their property investments,” says Mr Tan.
A SLIGHTLY improved showing last month could not salvage a dismal quarter for developers.
New home sales recorded their lowest quarterly total since late 2008, reflecting the sustained impact of tighter mortgage rules.
Developers sold 1,596 private homes in the three months ended Sept 30 – the lowest quarterly figure since just 419 homes were sold in the fourth quarter of 2008.
Still, the 648 units sold last month represented a 48 per cent comeback off a low base in August, according to figures released by the Urban Redevelopment Authority yesterday. Including executive condominiums (ECs), 707 units were sold – a 44 per cent rise from August’s figure.
“The increase in sales volumes comes after the end of the Hungry Ghost Festival, and buyers have started to come back into the market looking for deals,” said an OrangeTee report.
In the first nine months of this year, developers sold about 6,030 private homes, a 52 per cent dive from the figure in the same period last year.
Sales totals this year are just a fraction of those before the total debt servicing ratio framework was imposed in June last year.
Quarterly sales averaged about 5,000 back then, or roughly three times this year’s third-quarter total, said JLL national research director Ong Teck Hui. “This shows the extent to which demand has weakened in the primary market.”
Developers launched 514 private homes last month, a 29 per cent rise from the 399 homes launched in August.
Demand for high-end homes remained lacklustre, as the sales volume for the core central region was unchanged from August with just 44 units sold.
The anaemic sales came despite two launches in the area last month, with none in August. The top sellers last month were two newly launched projects – the 500-unit Highline Residences in Kim Tian Road, which moved 142 units, and 186-unit Seventy St Patrick’s, which sold 110 units.
The main action in the current quarter is set to be in the EC market, with the launches of Lake Life, Bellewoods and Bellewaters, said Mr Desmond Sim, head of research for CBRE Singapore and South-east Asia.
On the private home sales front, the market is anticipating the launches of Sophia Hills at Mount Sophia, Tre Residences in Geylang East and Symphony Suites in Yishun.
Consultants estimated that 8,000 to 9,000 new homes could be sold for the whole year – far lower than last year’s 17,590, and the lowest since the 3,840 recorded in 2008, said PropNex chief executive Mohamed Ismail Gafoor.
– See more at: http://business.asiaone.com/property/news/dismal-quarter-new-private-home-sales#sthash.ywYQuQnU.dpuf
Resale prices of non-landed private homes dipped marginally in September by 0.3 per cent month-on-month, according to flash estimates from SRX Property on Tuesday (Oct 14).
When compared with September 2013, resale prices of non-landed private homes have dropped 4.6 per cent. Compared with the recent peak in January 2014, prices have declined 5.6 per cent, SRX said.
Resale prices of private homes in the Outside of Central Region dropped the most last month, falling 2.1 per cent compared with August. In comparison, prices in the Core Central Region and Rest of Central Region rose by 0.9 per cent and 2.9 per cent, respectively.
Resale volume rose sharply, with an estimated 468 non-landed private homes resold in September, up 15.3 per cent from the 406 transacted units in August.
TOX IMPROVES, BUT REMAINS NEGATIVE
The overall median Transaction Over X-value (TOX), which measures whether people are overpaying or underpaying the SRX Property X-Value estimated market value, remained at -S$2,000 last month, up from -S$10,000 in August.
For districts with more than 10 resale transactions, districts 10, 15 and 16 saw a positive median TOX, with district 15 posting the highest median TOX of S$65,000, followed by district 16 with S$18,000 and district 10 with S$10,000.
Conversely, district 9, 11 and 12 had the lowest median TOX with -S$37,000, -S$35,000 and -S$23,000, respectively.
RENTAL VOLUME, PRICES DOWN
As for rental transactions, the number of non-landed private homes rented out last month was 3,171 – a 14 per cent decline from August. Year-on-year, rental volume improved by 8.7 per cent from the 2,916 units rented in September 2013.
However, rental prices continued declining, slipping 0.2 per cent from the previous month – the eighth consecutive month of decline.
The decline was greatest in the Outside of Central Region at 0.9 per cent and the Rest of Central Region at 0.6 per cent. Units in the Core Central Region saw a rent increase of 0.3 per cent, SRX said.
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Resale prices for non-landed private residential homes continued to fall in June, reaching a 1.5-year low, according to the latest report by the Singapore Real Estate Exchange (SRX) on Monday (July 14).
Overall resale prices fell 1.4 per cent month-on-month to hit an 18-month low, with prices at their lowest since December 2012, according to the SRX Flash Report. Compared to the price peak in January this year, June prices are 4.7 per cent lower.
Prices fell for all three regions – Rest of Central Region (RCR), Core Central Region (CCR) and Outside Central Region (OCR) – with the city fringe area leading the fall by 3.2 per cent. This was followed by the core central area and the suburbs, which dropped 1.7 per cent and 0.3 per cent, respectively, SRX said.
The majority of districts – or 15 of 24 districts – saw zero or negative median Transaction Over X-value (TOX) in June. For districts with more than 10 resale transactions, districts 15 (Katong, Joo Chiat and Amber Road) and 10 (Bukit Timah, Holland Road and Tanglin) had the lowest median TOX at negative S$50,000 and negative S$37,000, respectively.
The number of resale transactions went up though, registering a 7.9 per cent month-on-month growth to reach an estimated 452 deals in June. Resale volume has gone up by 53.7 per cent since the beginning of year, the report said.
In terms of rental deals, prices slipped 0.8 per cent compared to May while volume went up 2.2 per cent over the same period. An estimated 3,151 whole units were rented out last month, according to SRX.
http://www.channelnewsasia.com/news/business/singapore/more-deals-done-but/1262214.html
In today’s Business Times (10 June), the headline news is about the current property market in Singapore. Titled ” Dark Condos shine light on rising vacancy”, the article depicts the excess capacity building up in the private housing market, evident with some condominium developments completed six to 12 months ago, or even longer, point to significant vacancy.
A host of factors were cited, such as
1) strong investment demand for real estate after the global crisis,
2) escalation in private home completions of late, and
3) slower expatriate inflow.
Vacancies are set to climb and rents fall in general. Suburban locations, where most of the supply is, will be the worst hit.
After the global crisis, investors sought refuge in trusty assets such as real estate. Fuelled by the low interest rate environment, some took to hoarding property at new launches and are hence not bothered whether they can find a tenant after taking possession of their units, say observers. Some high net worth foreign buyers treat their Singapore property as a holiday home and leave it unoccupied most of the time.
But there are others who leave units vacant because they are not able to find tenants. Competition for tenants is increasingly intense, with both demand and supply factors at work. On the demand side, changes in labour policies have slowed down the flow of foreign professionals into Singapore while on the supply side, there is a higher-than-average number of private home completions.
Tthose who bought for rental returns would find themselves in a more competitive leasing market today, where units in mediocre locations would be more difficult to lease and therefore remain vacant for a longer duration, especially during this period of strong supply.
Due to low rents, some owners have left their units empty, especially the cash-rich set who did not take any housing loan for their purchase. A vacant unit may deteriorate faster but leasing it out at a low rent may not be feasible since it will incur high maintenance costs. High-end properties have the finest finishes, so maintenance and repair costs may be hefty. Selected fit-outs and finishings such as tiles may be of limited collection and difficult to replace if it is damaged by the tenant.
Developers left with unsold units, especially in the slow high-end segment, also contribute to vacancies as these projects are completed. Other factors may also be at play in specific projects. But the overall trend of rising vacancies and softening rents is clear amid climbing private home completions since last year.
The 13,150 private homes that received TOP last year was 27.3 per cent above the previous year’s 10,329 and 40 per cent above the past 10-year average of 9,395. The figure for Q1 this year was 4,114 and the full-year tally is expected to hit 17,138, based on estimates submitted by developers to the Urban Redevelopment Authority. Thereafter, completions are slated to climb further to 21,738 next year and 26,252 in 2016 before easing the following year.
URA figures show that the pool of vacant private homes has risen to 19,284 at end-Q1 2014 from 18,003 at end-Q4 2013 and 14,532 at end-Q1 2013. The islandwide vacancy rate rose to 6.6 per cent at end-Q1 this year from 6.2 per cent a quarter earlier and 5.2 per cent at end-Q1 2013.
The latest quarter’s increase could be due partly to families that had yet to move to the new homes that were completed in Q1.
Rising vacancies have been accompanied by softening rentals. For the first time since Q3 2009, URA’s private home rental index contracted in Q4 last year. The index dipped 0.5 per cent quarter-on-quarter, followed by a further 0.7 per cent drop in Q1.
Prediction of drop in the rent ranges from 4-10 per cent. Against the backdrop of the large supply, some landlords could become more flexible on their rents, particularly after the removal of the vacancy tax refund with effect from Jan 1, 2014. Landlords now have to pay property tax on their vacant units and some may accept a lower rent and have the unit rented out instead of leaving it empty.
Competition for tenants is likely to be more intense in suburban projects, as the bulk of completions last year as well as the potential supply pipeline are in Outside Central Region (OCR). URA’s Q1 rental index for non-landed private homes in OCR was down 2.3 per cent from a year ago. This compares with a decline of 0.3 per cent for Core Central Region (CCR) and a rise of one per cent in Rest of Central Region (RCR).
Of the 67,507 homes under construction at end-Q1, about 59 per cent were in OCR, 22 per cent in RCR and 19 per cent in CCR. Four years earlier, of the slightly over 36,000 units under construction, the respective shares were 30, 36 and 34 per cent.
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