High-end home sales get boost as buyers find reasons to bite - AsiaOne

Emerging value as well as currency movements are leading to a pick-up in high-end home sales here.

Going by Savills Singapore's analysis of URA Realis data, the trough appears to have been crossed for the volume of private home transactions above S$3 million in value.

The number of private homes that were sold above S$3 million in the first seven months of this year increased 17.7 per cent to 659 units from 560 in the same period last year. 

In contrast, the number of private homes sold at prices of up to S$3 million is almost unchanged; the figure inched up 0.3 per cent to 8,763 units in January-July 2015 from 8,736 in the same year-ago period.

In both price bands, though, the latest sales volumes are some way off levels in the first seven months of 2013, which captured the buoyant conditions in the Singapore property market - before the total debt servicing ratio (TDSR) was rolled out in late-June 2013.

Commenting on the flat year-on-year growth in the number of private homes transacted in the S$3 million and below category during January to July 2015, DTZ South East Asia chief executive Ong Choon Fah said a chunk of buyers in this price range would be HDB upgraders who tend to be more price sensitive.

"Such buyers have other options open to them, including buying a new Build to Order flat in an attractive location - or they may simply be quite happy to stay put in their existing flat and delay their upgrading decision until private condo prices become more attractive."

In contrast, said Savills Singapore research head Alan Cheong, the pick-up in transactions in the above-S$3 million category was due to value emerging in the high-end market, where prices have fallen at a faster clip than the overall private housing market.

Savills' analysis showed that the increase in transactions cut across both the landed and non-landed segments.

The number of landed homes sold rose 13.6 per cent to 318 in the first seven months of this year from 280 in the same period last year. In the non-landed segment, transactions climbed 21.8 per cent to 341 units from 280 units previously.

Mr Cheong highlighted that Savills' basket of luxury non-landed private home prices has fallen 11.2 per cent from its peak in Q1 2013 to Q2 2015; this outperforms the 6.7 per cent drop in the Urban Redevelopment Authority's overall private home price index since its Q3 2013 peak. "Moreover, with the appreciation in currencies such as the US and Hong Kong dollars as well as the British pound against the Singapore dollar . . . investors just cannot ignore this yawning price gap between the key gateway cities and Singapore."

Another reason Mr Cheong cited for the improvement in transaction volumes for private homes above S$3 million is the completion of condo developments such as Leedon Residence in District 10 which appeal to buyers who are more restrained about committing to off-plan sales. "Some buyers may prefer to buy completed units where they can have the look and feel of the actual property before committing," he added.

A significant proportion, 48 per cent, of the private homes that changed hands at above S$3 million in the first seven months of this year were landed properties.

More compelling prices for landed properties are also behind the improvement in transaction volumes in this segment. Realstar Premier Group managing director William Wong said: "Developers of new landed projects have a certain timeframe to sell off their properties or pay a penalty to the state; some of them are pricing projects more realistically.

"Buyers who have been looking for landed property for the past two years find that the price is more attractive now compared to when they started their search. A brand new boutique bungalow in a central location such as District 10/11, for example in Bukit Timah and Holland, used to go for S$11-12 million a couple of years ago. Now prices are S$1-2 million lower." Prices are even more attractive in the resale market, for example, in the low-S$8 million range.

Citing another reason for the upturn in transaction volumes of landed homes, Mrs Ong of DTZ said that those buying landed homes are likely to do so for owner occupation and would take a longer-term view. "Some of them could be less affected by the TDSR; in all likelihood they would have an existing property that they could sell. They may take the view that they are upgrading their portfolio, so to speak, and positioning themselves for a bigger price appreciation later on in land-scarce Singapore."

Realstar's Mr Wong has also observed keen buying interest in old houses for redevelopment purpose by developers.

This could explain the increase in the number of landed properties bought by companies to 30 in January-July 2015, compared with 21 in the same period last year; in fact landed homes accounted for the majority of private homes above S$3 million that were bought by companies in the first seven months of each of 2015, 2014 and 2013.

For Singaporean buyers, too, the bulk of their purchases over the same periods were landed properties. However, landed homes made up a minority of permanent residents' and foreigners' purchases - which is not surprising given the tightening in government approval for purchases of landed properties by non-Singapore citizens in recent years.

The number of landed homes costing more than S$3 million acquired by Singaporeans in January-July 2015 rose 14.2 per cent year on year to 281. In the first seven months of this year, they also bought 161 private apartments and condos in this price category, up 34.2 per cent.

The total 442 private homes costing more than S$3 million that Singaporeans bought in the first seven months reflects a 20.8 per cent increase.

PRs' purchases climbed 13 per cent to 104 private homes.Purchases by companies also rose by 31.3 per cent to 42 homes from 32 previously.

However, purchases by foreigners continued to fall, easing to 64 units from 69 previously. That said, foreign buying declined only in the S$3-4 million range, but increased for transactions above S$4 million.

This article was first published on Sept 28, 2015. 

Tuesday, Sep 29, 2015

Kalpana Rashiwala

The Business Times

Source: Asiaone (29 Sep 2015)

GCB site in Cluny Hill area sold for $21.52m - AsiaOne

A plum vacant freehold site of 15,097 sq ft in the Cluny Hill Good Class Bungalow Area is being sold for S$21.52 million or S$1,425 per square foot based on the land area.

The property is being sold by Standard Chemical Corporation. The buyer is Aston Holdings, Realstar Premier Group, which brokered the transaction, told BT.

A company search revealed that Aston is 90 per cent owned by Tan Koo Chuan, who also controls developer Yi Kai Group.

Based on caveats data, the Cluny Hill property was previously transacted in 2005 at S$6.64 million. The site includes three conservation trees.

Realstar Premier estimates it may cost S$6-8 million to build and fit out a new bungalow with a gross floor area of about 8,000-10,000 sq ft on the site.

The transacted price of S$21.52 million is lower than the S$24 million that the seller is understood to have looked for earlier this year.

The S$1,425 psf on land area at which the property is being sold is lower than the S$1,659 psf at which a GCB along Cluny Road facing the Botanic Gardens was transacted at in February 2014.

Market watchers suggest one factor for the lower price for the Cluny Hill property is that there is a power station next door.

Realstar Premier Group managing director William Wong said: "Most potential buyers of GCBs these days are looking for properties in the S$20-25 million range. About two years ago, in the first half of 2013, the budget was typically S$25-30 million.

"With sellers having lowered their price expectations, we are starting to see more GCB deals in this range and I believe there should be a pick-up in the number of transactions. At current levels, prices are attractive for buyers."

He added that the typical profile of GCB buyers currently are new citizens as well as those living in smaller bungalows and aspiring to upgrade to a GCB.

GCBs are the most prestigious type of landed housing in Singapore. The Urban Redevelopment Authority has designated 39 locations on mainland Singapore as Good Class Bungalow Areas - with strict planning rules to preserve their exclusivity and low-rise character.

This article was first published on Sept 28, 2015. 

Tuesday, Sep 29, 2015

The Business Times

Source: AsiaOne (29 Sep 2015)

So, you want to buy a second property - AsiaOne

You have been saving for years to buy a second property. Then came the cooling measures and it becomes much tougher to achieve that dream. Recently, there have been several seminars that claim to show you how to own two properties, even if you earn only a few thousand dollars a month.

But property expert Avis Wong warns there is no get-rich-quick scheme that can turn you into a multiple-property owner after a $2,000 weekend workshop.

In her free-to-download e-book Double Your Wealth Through Real Estate, Ms Wong looks at how such schemes work and the potential risks and pitfalls.

UNLOCK THE PROFIT

One common way is by leveraging your existing property, says Ms Wong, associate marketing director at PropNex Realty.

"Unlock your profits from your existing property by selling your flat and use the proceeds to upgrade to a condominium and buy a second investment property."

"This way, you get to keep your savings and use the proceeds from your current property to work for you. Couples who had bought their flats brand new would likely get a higher cash payout."

Of the two properties you buy, one should be sufficient to meet the family's needs while the second one should be of investment grade.

If the husband and wife are working and earn a decent income, they can buy the two properties separately, under a single name.

That would allow them to get an 80 per cent loan and avoid paying the Additional Buyer's Stamp Duty (ABSD) of 7 per cent that Singaporeans must pay for their secondary home purchase, says Ms Wong, whose 60-page e-book can be downloaded from www.facebook.com/DoubleYourWealth.

"Most people make the mistake of buying a residence too big for their needs and an investment property that is too difficult to lease."

On a cautionary note, Mr Vasu Menon, vice-president of wealth management at OCBC Bank, says sellers have to bear in mind that a mortgage is a long-term commitment as they may not be able to sell their properties easily and, if they sell within four years of purchase, they will incur Seller's Stamp Duty.

He notes: "There is no easy answer to the question of whether selling a property and using the cash proceeds to buy two more is a good strategy. A lot depends on the outlay for the properties the sellers plan to purchase, the ease of renting the investment property and the rent it can command."

He adds: "The ability to service the mortgages on the investment property depends on how easy the property can be rented out and the state of the rental market, which seems weak at the present moment.

"Unless you can rent out the investment property easily, you could either end up owning a property that is vacant for long periods or you may have to slash rentals to secure a tenant, especially when the rental market is weak."

Such fears are not ill-founded, says Ms Wong, but "as long as home owners are realistic and willing to go with the market demands", she believes the property can be leased out.

She also highlighted that vacant properties are mostly concentrated in prime districts and owned by wealthy investors.

The Total Debt Servicing Ratio (TDSR) framework ensures that people are not allowed to borrow beyond their means. Even so, Ms Wong, 42, still advises "exercising prudence".

Mr Royce Teo, the regional head of Treasures Private Client and Treasures at DBS Bank, notes how the three-month Sibor or Singapore Interbank Offered Rate rose from 0.457 per cent in Jan to 1.138 per cent earlier last week.

With rising interest rates and softening property prices and rents from the rise in residential supply, it would be "challenging to first secure a tenant and then using rental income to cover the housing loan instalment of the investment property".

GEARING UP

For those who wish to keep their existing home and do not have excess cash to buy another, an alternative is to "gear up" by taking out an equity term loan to invest in another property.

Such an option is only available for people who own a private property, one that has risen in value. Consider this scenario: Your condominium is worth $750,000 and you have a mortgage of $250,000. In addition, you have saved $100,000.

"You would have the option of paying down your loan with your $100,000 of savings so that you have peace of mind with your smaller outstanding loan, or to take out an equity term loan of $250,000 on your current loan. By 'cashing out' an additional $250,000, you would have $350,000 of cash to invest in another property," says Ms Wong.

She emphasises that this method is not suitable for everyone and advises getting an impartial financial assessment by a qualified third party. The homeowner would have to pay ABSD and can only borrow up to 50 per cent for the second property.

The age of the borrower is another factor to consider.

"It will be quite challenging for those in their late 40s because loan tenure will be much shorter, unless the person has a lot of CPF (Central Provident Fund) to leverage on," says Ms Wong.

Selecting a suitable mortgage that offers a combination of stability and flexibility with interest rates rising is equally important, said Mr Dennis Khoo, UOB's head of personal financial services (Singapore).

When applying for a mortgage, property buyers will also need to take note that their TDSR cannot exceed 60 per cent and Mortgage Servicing Ratio is capped at 30 per cent of their monthly income.

Mr Khoo adds: "For investors in their 20s to 40s, it is important to understand that by having a long-term investment horizon and investing as early as possible, it can help them smooth out the impact of volatility on investment holdings and manage their market risks.

"The first step for investors is always to understand their risk appetite and financial goals, then adopt an investment strategy they are comfortable with."

joycel@sph.com.sg

This article was first published on Sept 27, 2015. 

Source: AsiaOne (28 Sep 2015)

Bumper crop of 12,000 new flats to launch in November - AsiaOne

SINGAPORE - A total of 12,000 new flats will be up for a 'mega launch' in November, National Development Minister Khaw Boon Wan announced on Wednesday (Sep 23).

Mr Khaw said that the September BTO launch had been delayed to integrate three new housing policies: the new 2R Flexi Scheme, the increase in the income ceiling for new flats and enhancements to the Special CPF Housing Grant (SHG).

The minister added: "As implementation of any new policy does require some time, we therefore decided to delay the September BTO launch by a few weeks, so that these initiatives can benefit as many Singaporeans as possible starting from the very next BTO launch. Looking at the timing of the November BTO launch, we decided that a practical way is to merge the two launches into one mega launch in November."

The launch includes 7,000 Build-to-Order (BTO) flats in six HDB towns across the country - Bidadari, Bukit Batok, Choa Chu Kang, Hougang, Punggol Northshore and Sengkang - as well as 5,000 balance flats in a concurrent Sale of Balance Flats (SBF) exercise. 

The September exercise would have yielded 2,150 studio apartments and three- to five-rooms in the Bidadari estate.

debwong@sph.com.sg

Wednesday, Sep 23, 2015

AsiaOne

Source: AsiaOne

Freehold GCB site off Upper Thomson Road selling for $27 million - AsiaOne

A FREEHOLD Good Class Bungalow (GCB) site located at 53 Windsor Park Road has been put up for the sale by public tender - at an indicative price of S$27 million, reflecting a land rate of S$1,280 per square foot.

With a land area of about 21,091 square feet (sq ft), the plot is currently occupied by a part-single-part-two-storey bungalow that was built in the 1950s. It is on elevated grounds, providing a vantage point of the surrounding environment.

Located off Upper Thomson Road, the property is near other landed housing and low-rise condominiums, as well as Thomson Plaza, Sin Ming Plaza, Thomson V, Thomson Imperial Court and the shophouses along Upper Thomson Road.

Stella Hoh, executive director of Colliers' investment services, said: "There are rarely any plots being offered for sale in the past few years. The last two recorded transactions in the vicinity were a 22,481 sq ft site that was sold for S$25.3 million in January 2013, and another 19,280 sq ft property that was sold for S$27 million in December 2012."

Ms Hoh added: "According to caveats lodged, there were 25 GCB transactions worth a total of S$543 million in 2014. For 2015 to date, there are already 20 GCBs transacted at a total value of S$485 million and the figures are expected to grow - given that this upper tier of the landed residential property market has recently witnessed increased activities, on the back of more realistic asking prices from sellers."

The tender will close on Oct 21, 2015 at 3pm. Colliers has been appointed as the sole marketing agent for the sale.

This article was first published on Sept 21, 2015. 

Tuesday, Sep 22, 2015

The Business Times

Source: AsiaOne (22 Sep 2015)

Higher repayments ahead for home loans - AsiaOne

SINGAPORE - The recent surge in interest rates is going to bite home buyers who are facing an increase in monthly instalments which could run into hundreds of dollars.

And that will rub salt further into the wound for those with investment properties, as rentals are dropping like ten pins. The Urban Redevelopment Authority's overall private residential rental index in the second quarter of 2015 was down 2.7 per cent from Q4 2014.

Especially miserable are likely to be borrowers whose loan packages are pegged to the swap offer rate (SOR), given the 50 per cent jump in the 3-month SOR last month.

Home loan borrowers who took out a package based on the 3-month SOR should have gotten letters telling them they need to adjust their instalment amounts, said Tok Geok Peng, DBS Bank executive director of secured lending.

Based on a 20-year S$1 million loan, the extra amount they need to cough up a month is S$340.83, she said.

The 3-month SOR jumped to 1.405 per cent on Aug 28, up 0.409 per cent from 0.996 on July 31. As an indication of the volatility of the rate, it rose further to 1.564 per cent on Sept 8 but has since plunged to 1.284 per cent on Friday.

DBS has less than 500 SOR-based accounts, said Ms Tok. "We told (customers) SOR is not really a good benchmark because in the long run SOR tends to be more volatile," she said.

OCBC Bank said it has borrowers enquiring about switching to other pricing packages on a routine basis. A Citibank spokeswoman said the bank has seen an increase in customers who are considering options to switch to either fixed rate loans or to longer-term Sibor indices of six to 12 months.

The SOR is used more commonly to price commercial loans. SOR takes into account the expected forward exchange rate between the US dollar and Singapore dollar and thus could be affected by external factors such as the USD interest rate.

The typical home loan is based on the more stable 3-month Sibor or Singapore interbank offered rate but SOR-based loans became more popular when they dropped below Sibor. Sibor is generally determined by the demand and supply of funds in the Singapore interbank market.

"Around 2010-2011, when SOR started to dip below Sibor, some banks started to use SOR as a benchmark for their home loans which gave the borrower a lower loan rate," said Ms Tok.

"This resulted in SOR becoming more volatile because exchange rates as well as USD money market rates tend to fluctuate more," she said.

Sibor-pegged borrowers are not spared though the 3-month Sibor has risen more slowly; it was 1.139 per cent on Friday, up from 0.8788 per cent on July 31 or about 30 per cent higher.

DBS is offering borrowers spooked by the rising interest rates several refinancing options: fixed deposit home loan rate (FHR), fixed rate or managed mortgage package.

The FHR launched in April 2014 is the most popular, accounting for eight out of 10 new bookings for the last three months, said Ms Tok.

The FHR package offers borrowers transparency as their home loan rate is based on simple average of 12- and 24-months SGD fixed deposit rates offered by DBS.

Any increase in FHR means that the fixed deposit rates must increase.

Being the biggest bank in South-east Asia, DBS tends not to raise deposit rates quickly as it has more deposits that it can deploy.

The FHR rate of 0.4 per cent has remained unchanged since April 2014. Including a 1.4 per cent premium, the effective rate is 1.80 per cent.

As for those who prefer fixed rate packages, DBS has two- and three-year fixed rate options. The two-year package charges 1.98 per cent for both the first and second year, while the three-year option charges 2.18 per cent for each year.

For borrowers who worry about future increases in interest rates but want to enjoy the current low interest rate, they can consider the managed mortgage, she said. This special feature lets the borrower split the loan between a fixed rate and a floating rate package.

This article was first published on September 19, 2015. 

Saturday, Sep 19, 2015

Siow Li Sen

The Business Times

Source: AsiaOne (19 Sep 2015)

Quiet month for new private home sales - AsiaOne

New private home sales stagnated again last month during the Hungry Ghost Festival with no new condo launches to tempt buyers.

Developers moved 495 private homes in August, 69.3 per cent below the 1,611 sold in July, according to Urban Redevelopment Authority data yesterday.

This was comparable to the 437 homes sold in August last year and similar to the 400-500 monthly sales level seen in months when no new projects were launched.

July's sales spiked, thanks to strong interest at the attractively priced High Park Residences in Sengkang. It was also the best selling project in August, moving 76 units at a median price of $933 per sq ft (psf).

Overall primary sales numbers for this year could just match last year's total of 7,400 units, said Mr Alan Cheong, Savills' senior director of research and consultancy.

"These numbers do not a healthy industry make... As secondary sales take their cue from primary sales, primary sales should preferably be in the 10,000 to 12,000 units per year range for the real estate service industry to function normally," he said.

Low transaction volumes especially hit the smaller agencies, which are wholly dependent on residential sales and may not have large valuation departments or investment sales teams, he noted.

While last month's weak sales were within expectations as developers had held back launches, transactions this month are expected to be stronger with the launch of the 663-unit Principal Garden in Prince Charles Crescent, said PropNex Realty chief executive Mohd Ismail.

The higher income eligibility ceiling for executive condominium (EC) buyers introduced last month did not appear to lift sales significantly. Developers sold 466 EC units in August compared with 495 units in July and 110 units in June.

Sol Acres EC was launched last month and sold 259 units at a median price of $787 psf - a favourable outcome given the Hungry Ghost Festival and possibly due to the relatively low prices, said ERA Realty key executive officer Eugene Lim.

Sol Acres EC managed to maintain sales momentum after the launches of The Brownstone EC and The Vales EC in July, which together have 1,155 units, noted Mr Ong Teck Hui, JLL national director of research and consultancy. No new ECs were launched in June.

Yet unsold EC inventory has been building up. The take-up rate was 42.9 per cent in July and 65.9 per cent last month, said Mr Nicholas Mak, SLP International executive director. "In August, the number of launched and unsold EC units rose to 3,160 units. This is the first time since mid-2007 when such statistics were made available, that (it) exceeded the 3,000-unit level," he said.

The market's muted response to the higher income ceiling could be due to a number of factors, including a developer's track record, finishings, location, tougher lending rules and the many unsold EC units, said Mr Desmond Sim, CBRE research head for Singapore and South-east Asia.

But there should be a five to 10 per cent increase in EC sales volume this year over 2014 due to the higher number of launches and the larger pool of qualifying buyers resulting from the higher income ceiling, he added.

Upcoming launches include Signature at Yishun this month; and Wandervale in Choa Chu Kang, The Criterion in Yishun and Parc Life in Sembawang later this year.

wrennie@sph.com.sg

This article was first published on Sept 16, 2015. 

Thursday, Sep 17, 2015

Rennie Whang

The Straits Times

Source: AsiaOne (17 Sep 2015)

Additional Buyer's Stamp Duty 'can be safely removed' - AsiaOne

A combination of steps by the Government and the real estate industry over the last few years has made it safe to remove the Additional Buyer's Stamp Duty (ABSD), said the Singapore Real Estate Exchange (SRX).

In a report yesterday, SRX noted that the latest market data showed a subdued market in both public and private housing and there is no longer a threat of a housing bubble.

It reiterated that overall price indexes have not kept pace with economic and median household income growth.

Under the circumstances, housing remains very much affordable, thanks to efforts by the Housing Board, including the construction of more Build-to-Order flats and other initiatives designed to improve affordability.

"Since prices are under control and home ownership is accessible to all generations of Singaporeans, it is an opportune time to remove ABSD for the good of the overall economy." SRX cited three reasons why ABSD can be done away with safely without risking a return to the rapid price expansion between 2010 and 2012. 

They are:

- Standardised underwriting constraints;

- Flexible speculation controls; and

- Transparent pricing.

In 2003, the Monetary Authority of Singapore took several steps to standardise the mortgage underwriting process. These include tightening loan-to-value limits, reducing loan tenures, lowering the mortgage servicing ratio to 30 per cent for HDB loans, and introducing a total debt servicing ratio of 60 per cent for private property loans.

This comprehensive standardisation, which had not kicked in when ABSD was implemented, coupled with an increase in housing supply, helped to stabilise the market.

"This should give us confidence that we can lift ABSD and still protect Singaporeans from overextending themselves in a low interest rate environment," SRX noted.

Second, there are already in place flexible speculation controls in the form of the Seller's Stamp Duty (SSD), which curbs speculation without deterring good capital inflows into Singapore.

Under the rules of the SSD regime, properties sold within the first year of purchase would be slapped with the maximum fee of 16 per cent. Those sold within two, three and four years will incur a rate of 12 per cent, 8 per cent and 4 per cent, respectively.

Third, the pricing of properties today is much more transparent than previously. Since 2012, the Government has made property data more accessible to the industry and the public.

Developers are now required to submit a range of transaction data every week to the Controller of Housing, including sales volumes and transacted prices of individual units, as well as the value of any benefits extended to buyers, such as cash rebates, legal or stamp fee absorption, rental guarantees or furniture vouchers.

Private-sector initiatives have also helped to improve pricing transparency, productivity, and market efficiencies, SRX noted.

This article was first published on September 12, 2015. 

Saturday, Sep 12, 2015

The Straits Times

Source: AsiaOne (12 Sep 2015)

Singapore Rentals Continue to Slide - SRX

Another month, another drop in rentals.  Rents in private apartments are down 12.9% and HDB rents have declined 6.6% since their respective peaks.

There is little hope for landlords that rents will return to their pre-financial crisis levels.  Excessive supply and changes in renter demographics mean more downward pressure on rents. The question is how far down is solid ground?

Check out August rental numbers below or read more analysis on the rental market at Your Money Will Rent, What?

A. Non-landed Private Residential Rental Market


1. Private rents declined 0.4%. According to the SRX Property Price Index for Non-landed Private Residential Rentals, rents decreased by 0.4% in August 2015 compared to July 2015. Non-landed Private Residential units in CCR and OCR experienced decreases in rents of 0.7% and 1.3% respectively whereas RCR had a 0.8% increase.

According to the SRX Property Price Index for Non-landed Private Rentals:

• Year-on-year, rents in August 2015 are down 5.7% from August 2014.
• Rents in August are 12.9% down compared with its peak in January 2013.
• There is no revision for rents change in July.

2. Rental volume decreased 1.6%.  According to the SRX Property, an estimated 4,097 Non-landed Private Residential units were rented in August 2015. This represented a 1.6% decrease from 4,163 units rented in July 2015.

• Year-on-year, rental volume in August 2015 is 13.8% higher than 3,601 units rented in August 2014.

 
B. HDB Rental Market

1. HDB rents declined 0.6% in August.  According to the SRX Property Price Index for HDB Rentals, rents declined by 0.6% from July to August 2015. HDB 3 and 4 Room flats posted 1.1%, and 0.9% decreases in rents respectively, while 5 Room and Executive flats saw 0.1% and 0.7% increases in rents.

According to the SRX Property Price Index for HDB Rentals:

• Year-on-year, rents in August 2015 are down 3.6% from August 2014.
• Rents in August are 6.6% down compared with its peak in August 2013.
• Rents change in July has been revised from 0.1% decrease to 0.1% increase.

According to the SRX Property Price Sub-Indices for HDB Rentals in Mature and Non-mature Estates:

• Rents in Mature Estates experienced a 0.8% decrease, while rents in Non-mature Estates posted a 0.4% decrease in August 2015.
• Year-on-year, rents of Non-mature Estates in August 2015 dropped 4.4% from August 2014.
• Year-on-year, rents of Mature Estates in August 2015 slipped 3.7% from August 2014.

2. HDB rental volume decreased 6.1% in August. According to the SRX Property, an estimated 1,646 HDB flats were rented in August 2015, a 6.1% decrease from 1,752 units rented in July 2015.

• Year-on-year, rental volume in August 2015 is almost flat compared to 1,668 units rented in August 2014.

Source: SRX (11 Sep 2-15)

Singapore property may face ageing threat - SRX

IT is a hypothesis that could colour the common perception of the viability of property as a long-term asset to hold in Singapore:

A recent study by the National University of Singapore's Institute of Real Estate Studies predicts that Singapore home prices could fall by about 30 per cent by 2040 as the society ages and the old-age dependency ratio rises.

But economists and real estate consultants argue that this scenario may not come to pass because of investment and immigration flows. They say that the study by and large approaches residential property as a consumption good, ignoring the investment part of the equation, which should not be the case, given Singapore's status as a global city.

The working paper by a team led by Chihiro Shimizu, to be published next week, covered 12 Asian, five South and Central American and 18 European economies. It forecasts that, in ageing European and Asian economies - including Singapore - housing prices will drop as a result of demographic changes in the next 30 years.

This conclusion is not new; it has been much debated in US academic literature, but not many such studies have been done in the Asian context, noted DTZ regional head of research Lee Nai Jia, who was formerly an assistant professor in the Department of Real Estate at NUS' School of Design and Environment.

The researchers behind the study expect the old-age dependency ratio - defined as the proportion of the elderly to the working-age population - in Singapore, Korea, Hong Kong and Thailand to rise from between 10 and 20 per cent to between 40 and 60 per cent in the next 30 years; in China, the proportion of the aged is expected to grow from 11 per cent to 35 per cent.

The expanding ranks of the aged could in turn send home prices down by 50 to 60 per cent by 2040, it said. However, Singapore will buck the trend, in that its home prices could fall by less - 30 per cent.

The reason for this disparity comes from the study's assumption that the populations in other countries would stay somewhat stagnant, while Singapore's total population is expected to grow 36 per cent from 2010 to 2040, culminating in a population of 6.9 million - the figure used by the Singapore government for infrastructure planning purposes.

The projected growth in Singapore's population would have the effect of offsetting some of the housing demand lost from a more aged population, it said.

While the study focused primarily on Japan, where the population is greying and declining faster than anywhere else, it found that the empirical model continues to yield similar trends when extrapolated to other countries.

The paper explained that working-age people tend to trigger demand for housing because they typically build up assets during their prime years, and then consume their savings when they enter their senior years.

"During the asset-formation period, housing assets are considered to be a safe asset for people since they lose little value due to inflation, compared with savings. Houses may eventually be passed onto one's offspring or sold and the profits allocated to expenses in one's old age."

It added: "In an economy comprising these two generations, if life expectancy continues to increase without the social welfare system developing to accommodate it, working-age people will act to reduce their current consumption in preparation for post-retirement life."

This is how a longer life expectancy can cause a fall in the consumption level of society as a whole; in addition, because the elderly depend on those who work for a living, a larger elderly population would make the overall economy less active.

DBS economist Irvin Seah said the research debunks the misconception that property prices are a one-way bet: "That assumption essentially forgets that demographics do have a significant impact and can eventually take a toll on residential prices."

But other observers believe that immigration and offshore demand will create new demand to fill the gap left behind by the aged. (In fact, the report recommends that Japan start accepting more immigrants to arrest price declines.)

Mizuho economist Vishnu Varathan said the report under-accounts for Singapore's position as an investment hotspot. He added that Singapore does not have very many cheaper housing alternatives such as cheaper rural farmland, so prices will tend to be stickier and better supported.

He also pointed out that it is slightly tricky to predict where the dependency ratio will be in 30 years because a large part of Singapore's population is inorganic.

Permanent residents and non-residents make up about two-fifths - nearly half - of Singapore's population, for instance, which makes simple extrapolation from the current population make-up difficult.

The study, referring to economies outside Asia, predicts that the dependency ratio will rise from about 20 per cent to 40 per cent in Oceania and North American countries. But the impact on residential prices are "not as serious" in these countries because their populations are expected to grow 20 to 30 per cent.

In European countries, the dependency ratio is expected to rise from between 20 and 30 per cent to between 30 and 50 per cent, leading home prices to fall.

The declines are mostly capped at 20 per cent, but could be deeper in Germany, the population of which is ageing and shrinking; prices there could plunge more than 40 per cent.

The Business Times
Lee Meixian

Source: SRX (08 Sep 2015)

Condo rental prices fall in August - AsiaOne

SINGAPORE - Condo and private apartment rental prices declined 0.4 per cent in August compared to July, according to SRX Property's most recent Price Index report.

Year-on-year, rents in August 2015 were down 5.7 per cent from August 2014.

Rental volume for the sector also slipped by 1.6 per cent in August with an estimated 4,097 units rented compared to 4,163 units rented in July.

Year-on-year, rental volume in August 2015 was 13.8 per cent higher than the 3,601 units rented in August 2014.

Meanwhile, HDB rents dropped by 0.6 per cent in August from July. Year-on-year, rents in August 2015 were down 3.6 per cent from August 2014.

Rents in mature estates experienced a 0.8 per cent decrease, while rents in non-mature estates posted a 0.4 per cent decline in August 2015.

Year-on-year, rents of non-mature estates in August 2015 dropped 4.4 per cent while rents of mature estates slipped 3.7 per cent.

HDB rental volume decreased by 6.1 per cent with an estimated 1,646 HDB flats rented in August 2015, from 1,752 units rented in July 2015.

Year-on-year, rental volume in August 2015 is almost flat compared to 1,668 units rented in August 2014.

Wednesday, Sep 09, 2015

SRX Property

Source: AsiaOne

Condo resale prices up slightly in August - AsiaOne

SINGAPORE - Non-landed private residential resale prices went up by 0.2 per cent in August compared to July.

According to the SRX non-landed private residential price index, prices in August 2015 drop 1.7 per cent from August 2014.

Meanwhile, resale volume decreased with an estimated 466 condo units resold in August, a 16.8 per cent drop from the 560 units resold in July.

However year-on-year resale volume in August 2015 is 16.0 per cent higher compared with 402 units resold in August 2014.

Tuesday, Sep 08, 2015

SRX Property

Source: AsiaOne

Are you ready to own a property? - AsiaOne

The decision to own property is a crucial one. You need to do some detailed research before you decide whether you're getting a good property deal or not. Attending a property forum is one of the best ways to get professional insights on property investment.

At a recent StarProperty.my Own It forum, organised by StarProperty.my and Propwall.my, one of the speakers, Alexander Woo, shared some basic but important points on his topic, "How to spot a good property deal and are you ready to purchase?".

Woo discussed four main points that could help in making the best decision when it comes to choosing the right property.

1. Realising the need

Everyone needs a place to stay. Once you realise that you need a roof of your own over your head, it becomes a necessity to look for a property. Regardless of whether you are buying or renting, you should look for a safe area with good security features, a good neighbourhood, a suitable property type and a convenient location.

2. Key research on property

It is important to always look at the surrounding areas, and not just base your decision on how the property looks. Woo expressed the "3P's" that you should research on when deciding to buy a property.

1. Past performance: Do a background check on the growth rates, rental rate and rent demand of the property and its neighbourhoods. Find out whether the property type and location is worth spending your money on.

2. Present competition: Has existing projects affected the property's value? Explore the surroundings, and don't be afraid to approach property experts to find more about an area.

3. Possibilities / potential: Analyse the potential of a property by looking at its future developments. Will upcoming developments influence the value of the property? Find out more about the future projects, infrastructure, schools, and other big developments that might increase the possibility of capital appreciation.

3. Buying vs renting

The answer to whether you should buy a house or keep on renting is not an easy one. Woo touched on basic things that you can consider before making a decision on whether to buy or rent a property.

"If you are staying only for a short while, still can't afford to buy, or are able to get a better investment, then it might be best for you to rent. On the other hand, if you are financially capable of paying for a house, planning to stay for a long time and could not find any other better investment, then it might be a good idea to buy," said Woo.

Another thing to note is that the initial cost for renting is lower than buying because when you rent, you will only need to fork out about 2.5 months of deposit. However, if you buy a property, you need to pay 10 per cent of the property's price as a downpayment, and plus some other fees.

4. Subsale or new property?

If you can afford to buy a property, should you go for a subsale unit or a new project?

If you are planning to buy a subsale unit, you could get a mortgage loan of up to 90 per cent, but you are also responsible for the additional cost, such as 3 per cent booking fees, 7 per cent upon SPA (Sales And Purchase Agreement), legal fees, valuation and stamp duty.

For a new project, you could also get a mortgage loan of up to 90 per cent, but depending on the developers, you might get a special package, such as free SPA and legal fees, cash rebates and special early bird discounts.

"Buying a new unit seems to be more advantageous compared to subsale, due to lower initial cost, less repairs, it might come with new furnishings, and has loan valuation that is taken care of.

"However, for a new project, you usually have to wait a few years for the completion before you can move into the unit," said Woo

The key to finding a good property deal is to know what you want and what you need. You are the one who has to decide whether you can buy or rent, know what you can afford and what property suits you and your budget best.

Whatever your decision might be, make sure you weigh the pros and cons so you don't make a wrong move.

Monday, Sep 07, 2015

The Star/Asia News Network

Source: AsiaOne