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Property cooling measures ineffective?

- March 27, 2013 9 Comments

Not exactly... said Philip Loh in his letter published in the Forum page of our de facto English newspaper today.

Below is the full transcript:

THE Singapore Real Estate Exchange (SRX) reported that resale suburban condominium prices rose by 5.1% last month ("Resale suburban condo prices rise"; March 9).

This gave the impression that suburban property prices had gone up by 5.1% when, in actual fact, prices may have softened a bit from January.

The SRX reports average per square foot (psf) figures, which depend a lot on the mix of properties transacted.

As the sales volume plunged for the general resale market (older private properties), the sub-sales of private properties that were still under construction, about to get their temporary occupation permit (TOP), or just received their TOP (new properties) will pull the average psf price up.

Also, the sizes of these sub-sales units are usually smaller, which will generally fetch higher psf prices.

The mix of private properties transacted is simply getting newer and smaller. Even if real actual prices were to remain the same, the SRX would still have reported higher average psf prices as long as the mix of transacted units was skewed towards the "newer" and "smaller" trend.

The more balanced Urban Redevelopment Authority (URA) private property index reported a price gain of 2.8% last year, down from the 5.9% gain the year before ("Prices of suburban condo units climb 3.4% on strong demand"; Jan 3).

The difference is that the URA index adjusts for the size and age of private properties transacted, whereas the SRX does not.

As the Housing Board does not build shoebox flats, and new flats can be sold on the resale market only after the five-year minimum occupation period, the SRX actually reported a drop in last month's HDB resale prices.

Sales volume was reported to have dropped sharply last month and developers' share prices plummeted as a result of the poor outlook.

All these, I believe, are more indicative of the true state of the Singapore property market now.
The SRX's reported average psf price is a misleading indicator of the health and price trend of the Singapore property market. As a result, many Singaporeans may feel that the Government's property cooling measures are ineffective when, in actual fact, they could be working very well.

The wife and I appreciate the insight given by Mr Loh on the difference between the SRX and URA indices. And on the subject of price, we feel that as long as liquidity amongst potential home buyers remains high, private home prices will continue to rise, albeit at a slower pace given the latest set of cooling measures.

Enbloc news: Kismis Lodge sold for $84.8 million

- March 26, 2013 No Comments

Kismis Lodge, a freehold residential development located at Lorong Kismis in Upper Bukit Timah, was successfully sold to Newfort Alliance (Cairnhill) Pte Ltd for $84.8 million.

The sale price translates to $1,198psf, or a gross sale price of about $1.3 million each unit.

Brokered by property consultants Jones Lang LaSalle, this is the third en bloc sale deal completed this year.

"The ample living space within a landed property appeals to multi-generational families," said Yong Choon Fah, National Director of Investments at Jones Lang LaSalle.

"Despite the few rounds of property cooling measures, the demand for landed developments are expected to be fairly strong because the target market for landed developments are mainly Singaporean families," Ms. Yong added.

Built in the 1970s, Kismis Lodge comprises 64 units of walk-up apartments housed in two 4-storey blocks.
Source: Channel News Asia
Well, owners of Kismis Lodge did not get the $90 million that they expected but given the recent developments, the wife and I reckoned that they have not done too badly.

Click on link below to read our previous post on the Kismis Lodge collective sale:

Bartley Ridge: More than 200 units sold on first day of launch

- March 24, 2013 3 Comments

More than 200 units were sold by 4pm during last Friday's launch of Bartley Ridge. About 900 people turned up with their agents at 11am to enter a ballot for flats at the 99-year leasehold project between Serangoon and Paya Lebar.

Developers Hong Leong Holdings, City Developments and TID released 300 units under phase one.
They have offered an early bird discount of 15%, which will offset the additional buyer's stamp duty (ABSD).

The smallest one-bedder at 441sqft is priced from $580,000 while the largest dual-key four bedroom unit costs $1.97 million for 2,120sqft. Average per square foot (psf) prices for the different unit types range from $930 to $1,350.

The Bartley Ridge condo is a two-minute walk from Bartley MRT station on the Circle Line. The expected temporary occupancy permit date is 2018.


New project info: Hillion Residences

- March 21, 2013 2 Comments

The first mixed-use development in the west - Hillion Residences - was launched by property developer Sim Lian on Thursday.

The 99-year leasehold private condominium in Bukit Panjang integrates residential living with a retail mall and an air-conditioned bus interchange.

It will be also be linked to the existing LRT station and upcoming Bukit Panjang MRT station in 2015.

The project consists of 546 units, comprising one- to four-bedroom units and penthouses across three residential blocks.

A total of 250 units will be released for sale in Phase One, with a discount of up to 10% for the initial launch.

Since its preview on Monday, 50% of these 250 units have been sold. The preview was open to business associates and buyers who registered their interest early.

Sim Lian said prices start from $668,000 for a one-bedroom unit, $886,000 for a two-bedroom unit, $1,464,000 for a three-bedroom unit, $1,662,000 for a four-bedroom unit, and $2,780,000 for a penthouse unit.

The development is also located near schools like CHIJ (Our Lady Queen of Peace) and Zhenghua Primary School

Executive director of Sim Lian Group, Kuik Sing Beng, believes that the development will be attractive to a diverse range of home buyers like "families and HDB-upgraders, singles and retirees seeking convenience and investors seeking to enhance the value of their property portfolio".

Hillion Residences is expected to receive its Temporary Occupation Permit in September 2018.
Source: Channel News Asia

For those who are interested in the project, the sales gallery is located at Petir Road and is open from 10am to 7pm daily from today onwards.


February home sales plummeted 65%..!

- March 16, 2013 1 Comment

Sales of new private homes in Singapore fell sharply in February, due to the Lunar New Year holidays, fewer launches and the government's latest round of cooling measures.

However, analysts said it is still too early to gauge the effectiveness of the cooling measures introduced earlier this year.

According to data from the Urban Redevelopment Authority, 708 new units were sold during the month, down by almost 65% from January's 2,016 units.

The figure was the lowest recorded since the 632 units booked in December 2011, which coincided with the government's announcement of an additional stamp duty that month.

Including executive condominiums (ECs), just 917 units of new homes changed hands in February, compared to 2,272 units in the previous month.

Analysts said the drop was not surprising as February was a short month and it also included the Lunar New Year, which was typically a lull period in terms of new launches and transactions.

Mohamed Ismail, CEO of PropNex Realty, said: "The drop in February new home sales is also due to the latest cooling measures in January 2013 as potential homeowners are likely to take a wait-and-see attitude.

"Additionally, developers have held back on the project launches for the month and this is evident in only 261 new units that were being launched."

Desmond Sim, CBRE Research's associate director, said: "The full impact of the measures is not felt yet, so the dust has not really settled.

"We don't foresee any new measures coming in at this point in time. We also do not expect the developers to push the envelope to go for higher prices - there will be no more benchmark prices going forward."

In fact, analysts said some developers could offer more discounts to pull in the buyers - a strategy that seemed to have worked for D'leedon near Farrer Road.

It was the top selling project last month, with 166 units sold.

Q bay Residences at Tampines was the next best performer with 74 units sold.

In February, developers sold 341 units of new homes in the suburban areas, 198 units in the core central region and 169 units in the city fringe.

Chia Siew Chuin, director of research and advisory at Colliers International, said: "The upcoming launches are mostly on GLS (government land sales) sites, 99-year leasehold sites.

"The fact that there is a requirement for developers for their projects to complete and sell within a prescribed period, there is inherently more urgency for these developers to sell such projects.

"That is why we see these days, developers have been more open to consider discounts and incentives. But those with better balance sheets would probably be able to hold on to prices."

Including executive condominiums (ECs), URA said 917 units of new homes changed hands last month. The Topiary in Sengkang was the best performer, with 84 units sold.

In the latest move to tamp down the red-hot property market, the government in January made it costlier for foreigners to buy property by raising stamp duties, and sharply increased minimum cash down payments for individuals applying for loans for second or subsequent homes to 25% from 10%.

The latest measures were imposed after property prices continued to rise despite an economic slowdown that saw the city-state narrowly avoiding a technical recession last year.

The trade-reliant economy grew just 1.3% in 2012, down from 5.2% in 2011, with 2013 expansion forecast at 1.0-3.0%.

Earlier measures by the government to tame the property market included a move by the central bank in October to impose a maximum tenure of 35 years for new housing loans.

Analysts said market players will continue to closely watch home sales in March for trends.

They expect new home sales in March to do better, in the region of about 1,000 to 1,500 units, with a wider selection of new launches in the market.

For a start, D'Nest at Pasir Ris has already seen a strong take-up on the first day of its preview sales on Friday. About 80% of the 450 units launched have been sold.

The 912-unit condominium project was launched at a special early bird price of about $920psf.

The 332-unit Sennett Residence at Potong Pasir has been popular as well. Over 70% of the project have been snapped up this month.

"Now that the dust is more or less settled, developers have started project launches in March. Hence, March and the coming months will be the real litmus test for market demand and the effectiveness of the cooling measures," Colliers' Chia said.

She added that while home sales are expected to "return to a normalised level" this month, the new measures meant the government "will continue watching the market closely and policy risks remain".

Property stocks tumbled on Friday after the home sales figures were released, with Capitaland down 4.23% to $3.40, City Developments falling 3.67% to $10.76 and Keppel Land easing 2.04% to $3.84.
Source: Channel News Asia

New project info: D'Nest to preview tomorrow!

- March 14, 2013 No Comments

A new condominium, D'Nest, located at Pasir Ris Grove will be launched for preview sales on Friday.

The 912-unit project is jointly developed by City Development Limited (CDL), Hong Leong Holdings and Hong Realty.

In a statement, CDL said it is planning to sell the units at an average price of $990psf.

However, it will be offering an early bird discount of 7% on the launch price in view of the Additional Buyer's Stamp Duty which some buyers have to pay.

That will bring the selling price down to $920psf.

CDL said one-bedroom units will come with a price tag of about $498,000, while a two-bedder apartment will cost some $680,000. Prices for 3-bedroom units start at $820,000, and 4-bedroom apartments at $1.15 million.

Some analysts said it appears that the latest set of cooling measures, which kicked in on January 12 this year, has had some effect in moderating launch prices.

Lee Sze Teck, senior manager of Research & Consultancy at Dennis Wee Group, said: "Price-wise, compared to some other launches in the Pasir Ris area, it seems quite attractive... I think there could be strong demand, mostly from HDB upgraders."

Nicholas Mak, executive director at SLP International Property Consultants, said: "Prices of uncompleted condo projects in Pasir Ris range between $956psf and $1,000psf. So $920psf for D'Nest appears reasonable.

"At $920psf, I believe the developer will be able to move units. But if the price moves closer to $1,000, then demand might taper.

"The developer also has to bear in mind that there are likely to be two new condo developments coming up in Pasir Ris in the second quarter of the year, so there could be some competition."

D'Nest, a 99-year leasehold development, is located near the Pasir Ris MRT station.

Source: Channel News Asia
The wife and I cannot recall the last time a new project launch made the online news. But here is more info on D'Nest for those who are interested (courtesy of Colin Teo - 96905569):
And in case you are wondering where D'Nest is located, the project is next to NV Residences:


Property cooling measures #8: If not capital gains tax then...

- March 12, 2013 11 Comments

Comments made by our National Development Minister's last Friday, whereby he wants to lower the prices of new HDB flats, have sent jitters in the property market that the Government may bring in a fresh round of market cooling measures. This has sent property stocks tumbling over the past few trading sessions.

Property developers are concerned that lowering of HDB prices could affect the private market eventually as buyers switch to the HDB market. And some observers has interpreted the recent comments as a sign of the Government's willingness to further intervene in still buoyant private market, with increased sentiment and expectations of Round 8 of new cooling measures.

As you may recall, the seventh and toughest round of market cooling measures was unveiled in January of this year.

Rumors have been circulating in the market since last week that the Government may soon slash the mortgage servicing rate for private homes. This is the proportion of monthly income a borrower spends to service his monthly mortgage installments.

If you have been following our blog, we did put forward the possibility of reinstating the property gains tax by the Government in an earlier post. This has generated quite a lively discussion amongst our readers.

The wife and I decided to take another chance on our somewhat murky crystal ball and it has this to say: the mortgage servicing ratio for loans granted by banks on private home purchase may be capped as low as 30% of a borrower's gross monthly income. The current ratio can vary from anything between 30 to 60%.

The 30% mortgage servicing ratio was already implemented for bank loans on HDB flat purchase as part of the last set of cooling measures in January. 

To illustrate the impact of such a reduction in mortgage service ratio (illustration taken from a previous news article report): Let's take a buyer who takes up a 30-year loan for a $700,000 "shoebox" apartment. And let's assume that the loan to be 80% of the apartment's value, with interest rate pegged at 1.5%. Based on a 40% mortgage servicing ratio in the past, he would need to have a gross monthly income of $4,830. But for the same property at a 30% ratio, he would need to make $6,440 a month.

Will this cause a further dent in private property prices? The wife and I certainly think so.

When is this likely to happen? Sooner than you may think.

Click on the link below to read our previous post on property cooling measures round #8:

The Interlace (as of 9th March 2013)

- March 9, 2013 17 Comments

The wife and I were on our way to lunch today when we managed to snap a photo of the almost complete project that is The Interlace.

Architectural marvel or "coffins stacked on top of each other"? We let you decide...

Resale prices up 2.7% in Feb 2013

- March 8, 2013 No Comments

Resale prices of private non-landed homes increased 2.7% in February when compared with January 2013, according to flash estimates put out by the Singapore Real Estate Exchange (SRX).

SRX compiles data from 11 top property agencies in Singapore.

Leading the rise were properties in the suburbs. Resale prices of non-landed private homes in those areas rose surged 5.1% on-month to an average of $1,046psf in February, exceeding $1,000psf for the first time.

In the city fringes, resale prices rose 3.5% on-month to $1,272psf.

In contrast, resale private homes in the city or the core central region saw a decline of 4.7% month-on-month to reach an average per square foot of $1,788.

Despite price gains, only 325 resale transactions were recorded in February - a drop of more than 50% compared to January 2013. This was attributed to the Lunar New Year holidays in February.

Meanwhile, rental prices for non-landed private homes in February dropped by 1.3% compared with January. Rentals softened across all three regions, with units in city fringes recording the sharpest drop of 1.9%. The mass market segment saw rentals fall 1.6%, while the core central region reported a 0.4% dip.

SRX said small private apartments, commonly known as shoebox units in Singapore, bucked the trend of softening rentals for the entire non-landed residential market.

Rentals of shoebox units rose 1.8% in February. Units in the suburbs enjoyed a 101% rental price premium in per square foot terms over larger homes in the same areas.

Meanwhile, shoebox units in the city recorded a 63.0% rental price premium while those in the city fringes were rented at a premium of 66.8%, compared to larger homes in the same areas.

Source: Channel News Asia