SINGAPORE: Resale prices of HDB flats went up in the first quarter of 2012, at the same time the prices of private homes dropped for the first time since 2009.
HDB flash estimates reflected an increase of 0.6 per cent in the January-March quarter, the smallest increase in resale prices ever since the third quarter of 2006. The rise was also lower than the 1.7 per cent gain recorded in the fourth quarter of 2011.
HDB will release the resale price index for the full quarter on 27 April.
HDB has said it is dedicated to present 25,000 new flats under the Build-To-Order scheme this year and will put on sale 4,640 new flats next month in Choa Chu Kang, Kallang/Whampoa, Punggol and Sengkang.
Independently, a flash estimate by the Urban Redevelopment Authority (URA) illustrate a 0.1 per cent turn down in the price index for private homes in the first quarter this year, compared to a 0.2 per cent increase in the fourth quarter of 2011.
Prices of non-landed private residential homes dropped by 0.9 per cent in the core central region and 0.7 per cent in rest of central region during the quarter.
However, prices outside the central region increased by 1.2 per cent, compared to a 0.6 per cent rise in the previous quarter.
Remarking on the newest HDB figures, real estate agency ERA said resale prices are becoming stable and cash-over-valuation premiums are falling.
ERA’s key executive officer Eugene Lim said HDB resale prices have hit a ceiling and home-buyers are fascinated with the new BTO flats.
ERA added that the most recent move to apportion 15 per cent of BTO flats in non-mature estates to second-time HDB buyers has also encourage home-buyers toward this segment.
In general resale transaction volume has fallen, with larger flats such as five-room and executive flats witnessing a bigger decrease in resale volume compared to three- and four-room flats.
Base on its analysis, median COV for all flat types have dropped by between 16.7 per cent to 18.2 per cent.
ERA anticipates median COV to continue to fall and become constant at S$15,000 by year’s end.
On private homes’ resale prices, Jones Lang LaSalle’s head of research for Southeast Asia Dr Chua Yang Liang said weaker economic conditions have softened investors’ demand for private homes.
Together with latest government measures aiming at cooling the Singapore property market, sales volume and resale prices for private residential market have been further dampened.
He further noted that prices for private homes in the core central region fell 0.9 per cent, the biggest initial quarterly decline ever since 2004.
Nevertheless there is still a demand for mass market homes, with prices in the outside central region going up by 1.2 per cent, double that the fourth quarter of 2011.
Leasing activity in the private residential market is predicted to slow this year as the vague economic outlook causes companies to be more prudent in employing expatriates. Nevertheless there may be some leasing opportunities taking place from latest cooling measures, particularly December’s announcement of the 10 per cent additional buyer’s stamp duty (ABSD) on foreigners who purchase private homes.
Expatriates who are likely to pay the ABSD are expected to keep away from buying private homes as far as possible. Even those who are not liable to pay the duty may carry on leasing homes for fear that housing prices may drop shortly right after they make their purchases. This provides some support for the residential leasing market and alleviates drastic falls in rentals.
There are usually two groups of foreigners who purchase residential property: The first compose of those who are not in Singapore and purchase properties here for investments purposes. On the other hand, the other group consists of those who work here and come to a decision to acquire a home after growing familiar with Singapore.
The spate of corporate expansions in 2010 and the first half of last year have resulted in an increase in expatriates coming to Singapore, whether on partial or full housing packages or on local terms. Some of these foreigners who signed one-year leases may have purchased a residential property last year, at the same time as some who manage to sign a two-year (or one-plus-one year) leases are all set to look for a Singapore property to buy.
But with the ABSD, this group of foreign buyers is even more likely to think twice before committing to a private home in the event that prices fall after the purchase, mainly for resale homes. Given the new measures, this group may hold back their decision to buy and would rather renew leases for a year, or extend by half a year if this is possible.
Around 12,000 new homes will be finished this year, in excess of the 15-year average of about 10,000 new units per year. This number is not appalling as the recent years have witness rapid population growth in Singapore.
The new units that will come on stream this year will be considered as moderate supply if there is a continued economic growth momentum. This implies that the leasing market this year will be demand-led instead of supply-driven. The real supply-led concerns will surface in 2014, when about 20,000 units are projected to be completed.
The demanding economic conditions this year are expected to persuade new property owners to be more realistic in their asking rentals in order to procure tenants. As rentals for new units become competitively priced, older apartments in inferior physical condition is likely to suffer rental pressure. There may be some “flight to quality” by tenants whose leases end, to move to newer apartments if the asking rents are attractive.
The slowdown is not a new occurrence in a mature property market such as Singapore. After going through quite a a small number of property market cycles, homeowners here identify that property ownership and investment is for the long term.
Having a long-term view also denotes that many owners of centrally-located properties are aware that they have to “put up a little” through the year by presenting more competitive rentals. There can be potential for raising rentals in due course when economic growth picks up pace again. While this reflects increasing the maturity and market sensitivity of owners, it also signify that competition in the leasing market will become more powerful as more owners become more and more strategic.
The challenging economic climate is eroding the financial stability of some property owners, including those who have bought homes for owner-occupation.
More owners, including some who bought resale apartments in centrally-located areas for own use last year and are liable for seller’s stamp duty if they resell their properties within four years, are now considering renting out a room or two to ease their financial burden.
Meanwhile, more mid- to senior level expatriates are opting to live in lower-cost accommodation upon the expiration of the lease in light of the weakened economic and business conditions. Expatriates having housing allowances are focusing more on functionality than on luxury, reflecting their sensitivity to the companies’ running costs in Singapore.
As such, luxury apartments of 2,000 sq ft and above may lose some shine to the “second best high-end” apartments in the central area. The latter include the River Valley and Somerset area, where “walkability” to the main Orchard Road area can be an attraction to young professionals. Some well-positioned areas like Novena, Bukit Timah, East Coast, or even new growth areas like one-north may also be pretty attractive for the mid-level expatriates who are on partial housing allowances or on local terms.
SINGAPORE: The Urban Redevelopment Authority or the URA and the Housing & Development Board (HDB) are releasing six residential sites for sale in April 2012.
The aim is to give Singapore property developers and home-buyers with more options for private housing.
In a statement, the URA said that collectively, the six sites will give way to about 2,380 units as part of the total 14,100 residential units to be released under the Government Land Sales (GLS) Programme for 1st half 2012 (1H2012).
The three land parcels at Sengkang Square, Buangkok Drive and Pasir Ris Drive 3, which can yield about 1,780 housing units, will be opened for sale this coming Monday under the Confirmed List.
In addition, two additional residential sites at Alexandra View and Farrer Drive will in addition be made accessible on Monday for application on the Reserve List.
For the meantime, the land parcel located at Farrer Road will be released for sale on the Reserve List on April 30.
Furthermore, new home sales in Singapore continued to be strong last month.
A total of 3,032 units of new homes were disposed last March, and of which 2,393 were private homes and at the same time the rest were made up of executive condominiums.
The 2,393 units of private homes sold last month were marginally lower than the 2,413 units transacted in February.
In March, the star performers were Ripple Bay which sold 326 units, and then followed by The Minton with 118 units sold and finally the Riversound Residences which sold 115 units.
All the top-selling projects are to be found in the suburban areas.
With regards to executive condominiums, the number of units transacted also dipped slightly – from 725 units in February to 639 in March.
The best selling EC projects last month were Twin Waterfalls, with 369 units changing hands, and The Tampines Trilliant with 153 units sold.
A total of 8,247 units of new homes that includes executive condominiums were sold for the first quarter.
Based on the most recent research report conducted by Knight Franks, in March 2012, the Grade-A office market continued to be the weakest property sector in Hong Kong property. The retail sector persists to outperform on the back of strong demand from retailers, at the same time as the residential market reported additional rebounds throughout the traditional peak season. However, the Grade-A office leasing market saw signs of more correction, with large-scale transactions continued to be scarce.
Prime office
Companies continued to scale back their operations, ensuing in slow-moving leasing activity. Only a handful of Grade-A office leasing transactions were documented last month. Remarkable deals included a 12,000-sq-ft low floor in Exchange Square in Central, taken up by Hong Kong Exchanges and Clearing for HK$100 per sq ft per month.
Armani leased two floors totaling 34,000 sq ft in Kerry Centre, Quarry Bay for HK$40 per sq ft per month, while Swatch committed to one and a half floors in the same building, covering 25,000 sq ft.
More companies looked to surrender existing leases owing to weak business environment. Grade-A office rents in Central had decreased by about 16% by the end of March, from its peak in mid-2011.
Mr Thomas Lam Ho Man, Head of Research at Knight Frank in Greater China, anticipates the same to go down further 10–15% in the rest of 2012. In the meantime, rents in non-core districts will stay, thanks to low vacancy levels and continued relocation demand.
Luxury Residential Sentiment in the residential market remained robust, fuelled by more reductions in mortgage interest rates and the results of two residential site tenders. Residential sales surged 192% month on month, the highest level since November 2010. The number of secondary home sales climbed up by 200% to 9,923 and a few luxury flats were allegedly transacted at record-breaking prices.
A 3,966-sq-ft, high-floor duplex in Hong Kong Parkview, Island South and a 2,169-sq-ft duplex in Hillsborough Court, Mid-Levels Central were sold for HK$19,617 and HK$25,357 per sq ft, respectively—the highest prices in these developments to date. Mr. Lam thinks this momentum, however, will not be maintained with slow progress in the global economic recovery. Homebuyers will waver to buy with decreasing available flats, escalating asking prices and limited room for negotiation. Residential sales and home prices may fall again in the coming months.
Prime Retail
Rivalry between retailers for prime retail space showed no signs of abating. From February, the sales value of retail properties has doubled to about HK$7 billion and shop rents in prime retail areas increased by 3.5% in the first quarter of this year. The outlook for Hong Kong’s prime retail market continues to be positive in the midst of sustained leasing demand. Luxury retailers are expected to keep on outbidding existing tenants and secure prime spaces. Mr. Lam expects retail rents in core areas to rise about 10% in 2012.
SINGAPORE: The quantity of new private homes disposed within the first quarter of this year crossed the 6,600 mark – a record high, according to Singapore property analysts. Nevertheless have prices of private home sales peaked?
Riversound Residences and the Palm Isles were amongst last month’s top four selling projects, every one situated in the suburbs.
The month of March have raked in over 2,300 new private homes, a little lower than February’s 2,400.
Yet, the initial three months of 2012 have witnessed monthly sales of private units reached above 1,500 units – still considered high by many property analysts.
Whereas analysts do not see a bubble forming in the property market, they said additional cooling measures may well have a momentary effect. And the mid tier and high end market will still see correction of an estimated 15 per cent by the end of 2012, dragging overall prices by 5 per cent.
Chia Siew Chuin, director of research, Colliers, said: “When we talk about a property bubble, one has to be aware that we not only look at sales per se, but also at prices. The number of sales in this period is really supply-driven, but it is also likely to be at the expense of very little price movement we have seen in the market.”
Still, a number of analysts said developers are catering to demand, launching at least 2,000 units each month in 2012 – a number only achieved in April last year.
Chris Koh, director, Chris International, said: “The number of units being pushed out and the numbers being taken, you can see does not differ much. Like what we have shared, 2,500 units against a 2,300 take-up is actually a very healthy number.”
Different market outlook between the mass and luxury markets are expected to affect prices.
Ong Teck Hui, executive director, Credo Real Estate, said: “Where we are just talking about OCR where the volumes have been pretty strong, then the outlook for this year is fairly positive. We are likely to see a stable market with some slight upside in prices, perhaps 3-5 per cent. For CCR, in particular, the softening of prices is likely to continue.”
With the record high number of new private home units being taken up, analysts predicted that 2012 is destined to surpass last year’s sales of 16,000 units.