Bishan HDB maisonette sold for $1.09m in October, setting new record - SRX

SINGAPORE - The property market may be on the downtrend, but that did not stop a Housing Board maisonette in Bishan from fetching an auspicious $1,088,888 on the resale market in October and setting a new record.

The 150 sq m unit is located between the 22nd and 24th storeys of Block 194 at Bishan Street 31, near Bishan MRT.

Rare executive maisonette units in Bishan frequently fetch high prices.

The previous record price of $1.05 million was set in December 2013 by one such unit, a 150 sq m maisonette on the 20th floor of Block 190 at Bishan Street 31. Another maisonette in the same block has just sold for $1 million this December.

These remarkable deals took place even as overall prices in the HDB resale market have been sliding.

In November, HDB resale prices fell for the 10th month in a row to hit a 40-month low, according to Singapore Real Estate Exchange figures. Since the previous peak in April 2013, resale prices have fallen 9.8 per cent.

posted on 23 Dec 2014 

Straits Times

By Janice Heng

Source: SRX (23 Dec 2014)

Bishan exec maisonette sold for $1.08 million despite cooling measures - AsiaOne

SINGAPORE - Even with the Government's cooling measures to curb rising home prices, an executive maisonette in Bishan has fetched a princely sum of $1,088,888 - with an ideal location and nearby amenities.

The auspicious-sounding figure was sealed in a deal in October, according to local media reports.

The high-floor two-storey unit is located in a 27-year-old apartment block - Block 194 in Bishan Street 13. It is a minute's walk away from a supermarket and a 24-hour food centre.

Lianhe Wanbao said that another unit in the same block also made headlines for fetching $1.01 million in February last year.

Mr Huang, a sales director of a property agency, said that such high prices should not be seen as the norm for public housing.

He said that these million-dollar public homes does have their own selling points, such as ideal locations, but they could have also been through rounds of renovation to increase their value.

With amenities such as a community centre with a large Starbucks, a public library, a shopping centre, MRT and bus interchange, as well as a sports stadium all within walking distance, it comes as no surprise that flats in Bishan can fetch for an average of $513psf.

Property prices in the central region of Bishan, Braddell, Toa Payoh can also be priced from $1,365psf to $1,175psf. The MRT map reveals the highest cost of property value compiled across all home types in their specific regions.

wjeanne@sph.com.sg

Source: AsiaOne (22 Dec 2014)

UOB launches online mortgage calculator to help property buyers - AsiaOne

SINGAPORE - Potential property buyers will now have a service to inform them about how much a property loan they can take with United Overseas Bank's (UOB) new online property loan calculator.

Source: Internet Screen Snap

The calculator, launched by UOB on Thursday, allows potential buyers to determine their total debt servicing ratio (TDSR) for their mortgage loan applications.

In a press release, UOB said that one in three homebuyers surveyed were unaware or did not understand the Monetary Auhotrity of Singapore's (MAS) TDSR criteria for property loans.

Under the TDSR framework, customers can only be granted property loans if their total debt servicing ratio was 60 per cent or lower.

UOB's TDSR calculator covers loans to purchase and to re-finance properties across all property types, including private residences, Housing Board (HDB) flats, international and commercial properties.

Ms Chia Siew Cheng, head of secured loans, UOB Group, said: "Our aim is to make it easier for our customers to understand their personal financial situation, and for them to be able to make informed decisions about purchasing or refinancing a property."

According to UOB, one in two survey respondents prefer to use online calculators to find out how much they can borrow before sending their applications to a mortgage banker.

UOB's TDSR calculator can evaluate up to four borrowers' mortgage servicing ratio (MSR), or the proportion of monthly gross income spent on mortgage repayments, and also offers the option for customers to pledge their financial assets as additional income streams for detailed mortage analysis.

Says Ms Chia, "Buying a property is a long-term commitment. When someone decides to buy a property, they should be clear about the costs and terms of their home loans."

She added that buyers should also set aside sufficient funds to manage potential rising interest rates and other unforeseen circumstances.

UOB's TDSR calculator is a free service available at www.uob.com.sg/TDSR. Results from the calculator are displayed onscreen, and customers do not have to leave their contact details.

seanyap@sph.com.sg

Source: AsiaOne (18 Dec 2014)

More BTO flats push HDB resale prices down: SRX - AsiaOne

HDB resale prices hit a 40-month low last month, according to data compiled by SRX Property. Prices dropped by 0.8 per cent in November, compared to the previous month. 

This is a 6.3 per cent drop from last November, and 9.8 per cent decrease since its peak in April 2013.

1,350 HDB resale flats were sold in November, a 13.1 per cent decrease from 1,553 transacted units in October. Although resale volume increased by 11.4 per cent year-on-year, it is down 63.0 per cent compared to its peak of 3,649 units in May 2010.

Overall Median T-O-X was negative $3,000 in November 2014. Geylang posted the highest median T-O-X at $8,000, followed by Queenstown at $7,500 and Toa Payoh at $3,500.

In May 2013, one month before the government introduced Total Debt Servicing Ratio (TDSR), National Development Minister Khaw Boon Wan told participants at an Our Singapore Conversation dialogue on housing, "If housing prices keep rising, it won't be good. If we can maintain them or even lower them by a few per cent, for example 5 per cent, that's good. When I came into MND, that was my target."

"HDB prices have declined more than that of private resale flats because the government has been able to change both supply and demand in the HDB market whereas it has only changed demand on the private resale side," said Jeremy Lee, Chief Technology officer of SRX Property.

"From this year to 2016, MND expects 6,000 HDB upgraders to take the keys to their BTO flats each year. This number is twice that of last year. The upgraders must sell their existing HDB flats within six months of getting their BTO keys. The net result is that there is more supply in the HDB resale market. More supply puts downward pressure on prices," explained Mr Lee.

"There is a second way BTOs impact prices of HDBs. The government decoupled BTO pricing from the resale market resulting in lower BTO prices. As such, the BTO policy accomplishes two things. It introduces more units at below market price. This causes the price decline in the HDB resale market to outpace that of the private resale market."

The drop in prices spells good news for HDB buyers.

"HDBs are becoming more affordable thanks to the cooling measures and the increase in supply. A large percentage of Built-to-Order flats will be coming into the market, which will cause resale flats to have a downward pressure on their pricing," said Tim Seow, associate marketing director of GPS, "Furthermore, the very low interest rate means it is historically inexpensive for you to finance your home."

"Take advantage of the cooling measures to negotiate a discount, recognising that in the long run it is in everyone's interest for your home to appreciate and give you good returns," he added.

Source: AsiaOne (11 Dec 2014)

Private rents drop for 10th consecutive month on declining volume in November - SRX

A. Non-Landed Private Residential Rental Market

1. Private rents continued to fall. According to the SRX Property Price Index for Non-landed Private Residential Rentals, rents posted a drop of 0.8% in November compared to October. Non-landed Private Residential units in all three sectors (CCR, RCR and OCR) saw decrease in rents of 0.3%, 0.7% and 1.2% respectively.

• November marks the 10th consecutive monthly fall in rents.
• Rents have declined 5.7% since the start of the year.
• Year-on-year, rents in November 2014 are down 5.3% from November 2013.
• Rents in November are 9.4% down compared with its peak in January 2013.

2. Rental volume dropped. An estimated 2,892 Non-landed Private Residential units were rented in November 2014. This is a 11.0% decrease from 3,251 units rented in October 2014.

• Year-on-year, rental volume in October 2014 is 9.8% higher compared to 2,633 units rented in November 2013.

B. HDB Rental Market

1. HDB rents continued to fall. According to the SRX Property Price Index for HDB Rentals, rents posted a decline of 0.1% in November compared to October. HDB 3 and 5-room flats posted declines in rent by 0.2% and 1.0% respectively. 4 room flats rents levelled at 0% in October, while Executive flats saw a pick-up in rents by 3.5%.

• Year-on-year, rents in November 2014 are down 2.2% from November 2013.
• Rents in November are 4.1% down compared with its peak in August 2013.

Source: SRX (10 Dec 2014)

Revision of HDB Resale Price Index (RPI) - HDB

The Resale Price Index (RPI) provides the general price trend of resale HDB flats. The index computation methodology was last revised in 2002. Since then, the variety of resale flats, e.g. design, age, location, which has been transacted in the resale market has increased. It is therefore timely to update the computation methodology of the RPI. From the 4th quarter 2014, HDB will update the computation methodology of the RPI by:

i) Adopting the Stratified Hedonic Regression Method;

ii) Switching to 5-quarter fixed weights; and
iii) Adopting a new base period of 1Q2009.

New Stratified Hedonic Regression Method

2Currently, the RPI is computed using the stratification method, with a representative basket of towns and flat models. Resale prices are stratified into segments based on flat types, models and regions. The average prices for each segment are then aggregated using 12-quarter moving average weights to derive the index.

3With effect from the 4th quarter 2014, HDB will adopt the stratified hedonic regression method to compute the RPI. This method will control for variations in flat attributes, such as proximity to amenities, age and floor level, through a hedonic regression, to derive the general price movements in each segment. These are then aggregated using 5-quarter capital value fixed weights to derive the aggregate price change. To better reflect prevailing market structure, the weights will be updated once every three years. Please see Annex  (PDF 218KB) for the graphical illustration.

Updated Base Period

4Along with these changes, the base period will be updated to 1Q2009, from 4Q1998. This means that the RPI for 1Q2009 will be at 100. The current RPI series from 1Q1990 to 3Q2014 will be re-scaled to the new base period of 1Q2009. This adjustment will only impact the absolute levels of the index (see Table 1 and Chart 1), and the quarterly percentage changes will remain unchanged.

Table 1: Comparison of Current and Rebased RPIs

Quarter	Current RPI (4Q1998=100)	Current RPI (Rebased to 1Q2009=100)
Previous base 4Q1998	100	72.3
New base 1Q2009	138.3	100
2Q2009	140.2	101.4
3Q2009	145.2	105.0
4Q2009	150.8	109.0
1Q2010	155.0	112.1
2Q2010	161.3	116.6
3Q2010	167.8	121.3
4Q2010	172.0	124.4
1Q2011	174.8	126.4
2Q2011	180.3	130.4
3Q2011	187.2	135.4
4Q2011	190.4	137.7
1Q2012	191.6	138.5
2Q2012	194.0	140.3
3Q2012	197.9	143.1
4Q2012	202.9	146.7
1Q2013	205.5	148.6
2Q2013	206.6	149.4
3Q2013	204.8	148.1
4Q2013	201.7	145.8
1Q2014	198.5	143.5
2Q2014	195.7	141.5
3Q2014	192.4	139.1

Note: The re-scaling uses a factor of 100 (new index in 1Q2009) / 138.3 (original index in 1Q2009) multiplied on the original index level to derive the re-based index level for the respective quarters. Indices from 1Q1990 to 4Q2008 will be similarly re-scaled using the same factor. Due to rounding, there could be some differences in the quarterly price change compared to the RPI series before re-scaling.

Chart 1: Rebased RPI (1Q2009=100)  (JPG 1152KB)

5Back-testing of the index using the new method on 2014 data shows that there is no change in trend, and the quarterly changes follow closely to those computed using the current method (Table 2).

Table 2: Back-testing of RPI Based on Current Method and Revised Method

Time Period	Current RPI	Revised RPI
1Q2014	-1.6%	-1.9%
2Q2014	-1.4%	-1.5%
3Q2014	-1.7%	-1.8%

6The stratified hedonic regression methodology will be adopted from the next index release, i.e. the release of the flash estimate of 4Q2014 RPI in Jan 2015.

Source: HDB (09 Dec 2014)

Private Resale Market Continues to Stall with Mixed Results for Buyers & Sellers - SRX

Prices dropped on low volume but sales in November 2014 were 6.6% higher than sales in 2013.  On top of that, the median Transactions-over-X Value (T-O-X) improved to zero.

Analysis summary:

"When sales volume is this low, macro-analysis becomes less relevant and individual transactions are more pronounced," said Sam Baker, CEO and co-founder of SRX Property. "On the macro level, we can project, with reasonable certainty, that demand will continue to be anemic and prices will be relatively stubborn until there is a significant change to Cooling Measures, interest rates, supply, or an external shock, or some combination of the above.   Until then, the action is at the street level and requires micro-analysis.  50% of buyers in November paid above the X-Value for their unit and 50% paid below it.  This means that not all buyers and sellers are being impacted by the Cooling Measures in the same way.  A good percentage of expert agents and clients are using data to transact the right home at the right price in their particular project or street." 

Observations:

1. Non-landed Private Residential Resale prices slipped by 1.1%. Non-landed Private Residential Resale prices decreased 1.1% in November compared to October 2014.  Prices dropped by 1.3% in RCR and OCR, while CCR saw a slight price drop of 0.1%.

          According to the SRX Non-landed Private Residential Price Index:

• Prices, on low volume, pushed below the support level established since Jul 2014 
• Year-on-year, prices have dropped 3.4% from November 2013;
• Prices have declined 6.3% since the recent peak in Jan 2014.
• The revised index for October remains unchanged at 0.4% price increase compared to September.

2. Resale volume shrank by 22.4%. According to SRX Non-landed Private Residential Resale data compiled by SRX Property, an estimated 388 Non-landed Private Residential units were resold in November, a 22.4% decrease from 500 transacted units in October.

• Year-on-year, resale volume was 6.6% higher compared with 364 units resold in November 2013;
• Resale volume is down 81.1% compared to its peak of 2,050 units resold in April 2010.

3. Overall median Transaction Over X-Value (T-O-X) reached zero. According to SRX Property, the median T-O-X for Non-landed Private Residential reached a neutral level in November. The  median T-O-X for Non-landed Private Residential measures whether people are overpaying or underpaying the SRX Property X-Value estimated market value.

• The median T-O-X was $0 in November 2014;
• This is the first time non-negative median T-O-X is reported since Oct 2013.

4. Districts 9, 22 and 11 posted high median T-O-X. For districts with more than 10 resale transactions in November 2014, district 9 had the highest median T-O-X of $80,000, followed by $30,000 in district 22 and $15,000 in district 11.

      This means that majority of the buyers in these districts has purchased units above the computer-generated market value.

5. Among relatively active districts, District 5 posts the most Negative median T-O-X. Among districts  with more than 10 resale transactions, the lowest median T-O-X was in district 5 with T-O-X of NEGATIVE $40,000, followed by NEGATIVE $20,000 in district 16, and NEGATIVE $15,000 at district 19. 

      This means that majority of the buyers in these districts has purchased units below the computer-generated market value.

Source: SRX (09 Dec 2014)

Condo rents to drop by up to 10%: ANZ - AsiaOne

VACANCIES in the private residential market are set to inch up over the next few years as a supply glut looms, and this would exert further downward pressure on rents and, hence, investment returns.

ANZ Bank flagged in a report on Friday that Singapore's population growth is not enough to absorb the new housing supply between 2014 and 2017, with record completions of new homes posing a "supply shock".

Daniel Wilson, economist for ASEAN and Pacific at ANZ Bank, said that he expects non-landed property rents to fall cumulatively by up to 10 per cent by the end of next year, given the time lag between changes in vacancies and rents.

Rising interest rates pose a second headwind, he added, warning that a potential 100-basis point hike in interest rates next year could trigger a sharper fall in rents.

Vacancy rates in the first three quarters of this year have already outpaced the bank's expectations.

Data from the Urban Redevelopment Authority (URA) showed that private residential rents sank by a deeper 0.8 per cent in the third quarter, after a 0.6 per cent decline in the preceding quarter; the data showed overall private home prices slipped 0.7 per cent in the third quarter.

The vacancy rate of private homes rose to 7.1 per cent in the second and third quarters, the first since 2006 that it has exceeded 7 per cent, with the vacancy rate for non-landed private homes already exceeding 8 per cent in the second and third quarters.

Mr Wilson said that a vacancy rate of 7.5-8.5 per cent is deemed the tipping point at which "intensified downward pressure on property rents manifests itself". But the overall vacancy rate for private homes could rise to a higher 8.5-9.0 per cent over the next two years, he projected. "Though the supply pipeline is well-anticipated, its impact has not been tested," he said.

About 80,000 units are in the supply pipeline - including units under construction and planned development - way above the long-term average of about 60,000 units. Some 80 per cent of these units are already under construction and many will be hitting the market over the next few years, according to Mr Wilson.

URA's third quarter statistics showed that some 20,852 private condos and executive condos will be completed in 2014, significantly higher than the 13,150 units completed in 2013. Another 23,769 units are expected to be completed next year.

ANZ expects new completions of private condos to peak in 2016, nearly 2.5 times the long-term average.

Even by assuming that the population size of Singapore will grow to 5.9 million in 2020 with slightly over 80 per cent of the households staying in HDB flats and the rest staying in private homes, the population growth is not sufficient to absorb the new supply, he warned.

Meanwhile, the economist expects any decline in property prices to be more muted relative to the decline in rents, as developers are easing prices modestly to move inventory rather than undertake any fire sale.

If the 80th percentile of the median resident household income is used as a proxy (since 80 per cent of the resident population live in HDB flats), "prices have not grown too fast", Mr Wilson argued.

This article was first published on Dec 6, 2014. 

Monday, Dec 08, 2014

Lynette Khoo

The Business Times

Source: AsiaOne (08 Dec 2014)

Shoebox units 'hit by weak leasing market' - SRX

A WEAK leasing market may be hitting prices of shoebox units - long seen as a stronghold for rental yields.

Consultants note that while prices of new flats have risen marginally, resale prices have fallen.

In another sign of the weaker market, four shoebox units - apartments of up to 506 sq ft - were put up for auction by mortgagees in the first 10 months of this year, consultancy JLL found.

There were no mortgagee sales of shoebox units in the same period last year or in 2012.

"The weak residential leasing market has resulted in the lower ability of borrowers to finance their mortgages, and higher loan defaults," said Ms Mok Sze Sze, head of auction and sales at JLL.

Mr Alan Cheong, research head at Savills Singapore, said it has been a "tale of two markets" for "shoeboxes" - one for new sales and the other for resale and sub-sale units.

While transactions have plummeted for new homes, prices rose 1.1 per cent from the first quarter of last year to the middle of this month.

Prices in the secondary market are down 4.8 per cent over the same period, with transactions falling as well.

The decline in the number of sales of new homes has been greater than that in the resale and sub-sale markets.

This supports the hypothesis that prices of new units are holding firm, as developers have reached a point where they cannot cut further as it would mean negative margins or below-normal profits, said Mr Cheong.

"With no crisis brewing currently and from the healthy profits they made in previous years, they cannot be cowed into selling below cost," he added.

But prices in the secondary market have fallen more as individuals have weaker holding power. The four shoebox units put on sale by lenders were at Estilo in Wilkie Road in Rochor, Casa Aerata in Lorong 26 Geylang, Parc Rosewood in Woodlands and Eis Residence in Haig Avenue. None has been sold. Two other shoeboxes were put up for auction by their owners - at Jupiter 18 in Lorong 102 Changi Road and The Verve in Jalan Rajah in Whampoa - but these have not been sold either.

Residential vacancy rates are expected to exceed 10 per cent in the next 18 months, so the pressure on owners with recently completed shoeboxes lacking a tenant will grow, said Mr Ku Swee Yong, Century 21 chief executive officer.

He noted that units in outer areas, where owners are competing for low-budget tenants, are particularly at risk. At Parc Rosewood, for example, asking rents are from about $1,600 a month for a 431 sq ft unit, close to the roughly $2,000 rent for a 800 sq ft three-room Housing Board flat.

Overall, experts regard the outlook for shoebox units as being relatively positive.

"The increase in supply of shoebox units over the years has generally been well absorbed in a high liquidity and low interest rate environment... More affordable shoebox units will continue to appeal to singles, couples without kids, and investors looking for higher- than-market rental yields," said Ms Chia Siew Chuin, director of research and advisory at Colliers.

posted on 29 Nov 2014 

BY RENNIE WHANG

Source: SRX (29 Nov 2014)

HDB to revise resale price index - AsiaOne

The Resale Price Index (RPI) for HDB flats will be revised to reflect changing market conditions, said Minister for National Development Khaw Boon Wan in his blog Wednesday.

Here is the full statement from Mr Khaw Boon Wan's blog:

In Singapore, property price movements are closely watched and commented upon. With more than 90 per cent of Singaporeans being home owners, the state of the property market, especially the housing market, is of strong interest to all. This is particularly so in the HDB resale market.

When resale prices shoot up continuously, buyers or potential buyers are anxious. When resale prices continue to moderate, the table is turned and sellers or potential sellers become nervous.

At one NTUC Dialogue, Secretary -General Lim Swee Say, in jest, asked me if I could create two housing markets in Singapore, a market for buyers where prices continue to fall, and a separate market for sellers where prices continue to rise. The audience had a good laugh!

Managing the property market is therefore both an art and a science: projecting and ensuring a good matching of supply and demand, while correctly sensing the mood takes some skills and good luck.

The science part of the skills requires a good property price index. For the HDB resale market, we currently have the Resale Price Index (RPI) which HDB publishes every quarter. The index gives a general sense of resale price movements and serves as a useful reference point for home buyers and sellers in their decision-making.

To construct the RPI, HDB takes the average resale flat prices for a representative basket, by flat types, flat models and region, based on actual resale flat transactions. The average resale flat prices for each segment are then aggregated to derive the index.

To be effective and representative, RPI must reflect the prevailing resale market. In recent years, the HDB resale market has actually evolved considerably. First, we now see a wider range of flats, differing in designs and attributes.

For example, newer flat models, including taller blocks, are increasingly being transacted in the resale market. We have also reintroduced 3-room flats since 2004, after the current RPI was last revised.

Second, there are now a lot more resale transactions for flats in newer towns, such as Punggol, Sengkang and Sembawang, but these towns are not included in the representative basket currently. In other words, the current RPI does not capture movements in resale flat prices in these towns.

Third, unlike the past, there is now greater variance in the age profile of flats being transacted in the resale market. Such variance must be taken into account in making price comparisons.

With these significant changes in the HDB resale market, the current RPI may not adequately reflect the resale market. It is therefore timely to review the RPI methodology to better capture price changes over time, and control for the variations in attributes of the resale flats transacted.

This will allow the index to continue serving its purpose of providing timely and reliable information on the resale market movements.

Indeed, HDB has been working with a consultant from the NUS Department of Real Estate to review the RPI computation methodology. The review has recently been completed. HDB will be sharing more details soon.

Wednesday, Dec 03, 2014

The Straits Times

Source: AsiaOne (03 Dec 2014)

Singapore tops office rental growth in Asia: Jones Lang LaSalle - Channel NewsAsia

The strong rental growth in the third quarter comes on the back of low vacancy levels in the city-state, the real estate consultancy says.

SINGAPORE: Office rental rates in Singapore grew 3.5 per cent from the previous quarter in the third quarter of the year, the fastest growth in Asia, Jones Lang LaSalle said.

The strong rental growth comes on the back of low vacancy levels in the city-state, the real estate consultancy said in a report released on Wednesday (Nov 19).

Office rents in Tokyo, Beijing and most emerging South-east Asia markets grew by 1 to 2 per cent quarter-on-quarter, while Hong Kong saw marginal growth of 0.4 per cent driven by the top end of the market, the report said.

In the Asia-Pacific region, New Zealand saw strong rental growth in the third quarter as well, with rents in Auckland and Wellington growing between 3.8 per cent and 4.6 per cent from the previous quarter.

Over the next 12 months, the strongest rental growth in Asia Pacific is likely to be seen in Tokyo, Beijing and Auckland, Jones Lang LaSalle said, adding that the growth rate in Singapore will likely slow sharply due to upcoming supply.

- CNA/cy

Source: Channel NewsAsia (19 Nov 2014)