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2014 private home sales report card

- January 16, 2015 No Comments

The 2014 full-year tally for new private home sales (excluding ECs) has came in at about 7,380 units with 7,750 units launched. This was half the 14,950 units sold and 16,040 units launched in 2013.

Including ECs, a total of about 8,960 units were sold in 2014, out of the 10,260 units launched.

For 2015, analysts are expecting developer sales of 7,000 to 10,000 units. Prices of private homes are forecast to drop by 5 to 8% after a full-year decline of 4% in 2014.

Info source: BT

The wife and I had penned our thoughts for 2015 in an earlier post. Here's the link again for those who are interested

Sharp drop in December private home sales: URA

- January 15, 2015 No Comments

Demand for new private homes in Singapore fell sharply in December, according to latest data from Urban Redevelopment Authority (URA) on Thursday (Jan 15).
According to the URA, developers sold 230 units of new homes last month, down 45.6% from the 423 units sold in November 2014. During the month, developers launched just 53 new units for sale, excluding executive condominiums.

The mass market segment continued to lead sales with 134 units sold, followed by 61 units in the city fringe and 35 units in the core central region. The top selling project in December was Lakeville in Jurong, which moved 16 units.

Including Executive Condominiums, 406 new units were transacted last month and a total of 800 units were placed for sale by developers. The best performer in the EC segment was The Terrace in Punggol with 128 units sold.

Home sales in Singapore have weakened considerably since the Government rolled out a series of cooling measures and loan curbs in recent years.

Source: CNA

Private home rentals down for the 11th consecutive month in December!

- January 14, 2015 No Comments

Rental prices in the non-landed private residential market fell 0.8% on-month in December, the 11th consecutive month of decline, according to SRX Property.
Units in the Core Central Region, Rest of Central Region and Outside of Central Region saw rental prices decline by 1.2%, 0.6% and 0.3%, respectively.
Year-on-year, rental prices for non-landed private homes were down 5.3%, and were down 10.1% from its peak in January 2013.
Rental volume fell 2% on-month, with an estimated 2,968 units rented in December, down from the 3,026 units rented the previous month. On a year-on-year basis, rental volume was up 14.1% compared with the 2,601 units rented in December 2013.
Source: CNA

Private resale prices down 6.1% since January 2014: SRX

- January 13, 2015 No Comments

Resale prices of non-landed private homes inched up 0.1% in December 2014 from the previous month, while resale volume remained flat, according to flash estimates from SRX Property on Tuesday (Jan 13).

Year-on-year, resale prices dropped 4.2% from December 2013.

Compared with the recent peak in January 2014, prices have declined 6.1%, SRX said.

Resale prices of private homes in the Outside of Central Region rose 0.5% month-on-month. In comparison, prices in the Core Central Region and Rest of Central Region fell 1.1% and 1.2%, respectively.

Resale volume remained flat, with 371 units resold in December, unchanged from November. Year-on-year, resale volume was 13.1% higher compared with the 328 units transacted in December 2013.

The overall median Transaction Over X-value (TOX), which measures whether people are overpaying or underpaying the SRX Property X-Value estimated market value, fell to -$10,000 last month from zero in November.

For districts with more than 10 resale transactions, districts 25 (Kranji, Woodgrove) had the highest median TOX of $25,000, followed by district 15 (Katong, Joo Chiat, Amber Road) with $24,000.

Conversely, district 10 (Bukit Timah, Holland, Tanglin) had the lowest median TOX with -$80,000, followed by district 23 (Bukit Panjang, Choa Chu Kang) with -$41,000 and district 5 (Pasir Panjang, Clementi) with -$32,000.

Source: CNA

New project sales status: Good take-up at Marine Blue preview!


CapitaLand Limited sold 31 of the 50 units released during the preview of its new freehold condo project Marine Blue over the weekend, at an average price of between $1,800 and $2,000psf.

The units sold included one-bedroom-plus-study and two-bedroom ones and a penthouse, said a CapitaLand Singapore spokesman.

The price list obtained by BT showed a 10% discount off the listed prices.

Sited next to Grand Mercure Roxy Hotel along Marine Parade Road and within walking distance of the upcoming Marine Parade MRT station, Marine Blue comprises 120 condo units and four strata terrace houses.

Construction has begun.

The showflat in Bedok South Ave 3 first opened for viewing two weeks last month, and then closed for the year-end festive seasons; it was re-opened last week for the preview for buyers who had indicated interest for the project.

Recent transacted prices of freehold condo units in the vicinity, including 70 Saint Patrick's, Coralis, Seaview and Parc Seabreeze, have fallen within the range of $1,630 to $1,730psf; rents have averaged at between $3.20 to $4psf per month, said SLP International executive director Nicholas Mak.

Property consultants noted that rental prospects for the project look promising, given its proximity to amenities such as Parkway Parade, Katong 112 and the East Coast Park.

Info source: BT

Just goes to show that despite the weak property market, buyers are still willing to fork out money for projects with good locations.

If only the project comes with a better name ...

Useful info for those looking to invest in Australian properties

- January 10, 2015 No Comments

The wife and I came across an article in BT advising potential buyers on some of the pitfalls when buying Australian properties.

Following may be especially useful to first-time investors into Australia:

1. Only brand new properties
All property purchases by non-Australians must be approved by the Foreign Investment Review Board (FIRB), which monitors the flow of foreign investment into Australia. And the only properties available for foreigners to purchase with FIRB approval are those which are brand new. However, these can sometimes be up to 40% above similar properties in the same region because of limited supply of brand new properties. The inflated price could lead to other challenges, such as the property taking a longer time to be resold.

2. Limited lending
Banks will usually lend up to 80% of the purchase price of a property but with above market prices being charged for offshore sales of brand new Australian properties, it is not uncommon for bank valuations to come in significantly lower - sometimes at 40% below contract price - which means the buyer has to fund the difference (caused by the high price).

3. Inability to on-sell to the global market
Once the property has been sold new to a foreigner it can only be sold again to a local. Often high-rise apartments sold off the plan overseas simply do not appeal to the local market.

4. Unethical sales tactics
Developers have been known to run property "education seminars" under the guise of giving free property market information but with a hidden agenda of directing buyers to a particular development. Fair Trading Offices across Australia are currently targeting such selling tactics as they are not unbiased and can be misleading and deceptive.

5. Conflict of interest
In circumstances where the developer has arranged financiers, agents, solicitors and one stop shopping to sell the development - those who the buyer may think have his best interests at heart have close ties with the vendor and are financially rewarded if and when the sale proceeds.

Adeus, EcoHouse!

- January 9, 2015 No Comments

EcoHose Developments Limited, the Brazilian social-housing development that amassed up to $65.55 million from Singapore investors and then left them largely unpaid, has met its demise.

Come Jan 15, creditors will meet at the Talbot Hotel in the UK for updates from EcoHouse's directors on the company's statement of affairs, and then appoint a liquidator to wind up the company and distribute its assets appropriately.

The news follows the move by the Monetary Authority of Singapore to put the Brazilian property developer on its investor Alert List last July, after having received several complaints from unpaid investors.

The company had begun seeking investments from Singapore in September 2011 to fund property developments in Natal in Brazil, under the Brazilian government's Minha Casa, Minha Vida (My House, My Life) social housing project.

EcoHouse offered Singapore investors three property developments in which to park their money: Arco Iris, Casa Nova and Bosque.

For a minimum investment of GBP23,000 ($46,408) per housing unit, EcoHouse offered a fixed rate of return of up to 20% for a 12-month contract.

Things went well at first. EcoHouse announced the completion of its first project, Arco Iris, and investors were paid.

Then problems cropped up in November 2013, when the company delayed the Casa Nova and Bosque projects, and offered investors a deed of modification (DOM), promising them 20% of their investment sum upfront and the remainder, two years later.

At around March 2014, EcoHouse stopped selling its Brazilian properties in Singapore after investors filed lawsuits against it for failing to pay them back on time.

By August 2014, EcoHouse had shut its Singapore office.
Info source: BT

The wife and I have been following the EcoHouse saga since July of last year. While some may trumpet this as another example of why Singapore property investors should just stick to local properties (given the zero default rate) rather than venturing overseas, we feel that the EcoHouse debacle is not a representation of all foreign property investments out there.

Having been involved in foreign property purchases over the past few years, the wife and I are particularly mindful of the risks that come with such investments. Other than your typical purchasing decisions associated with buying an investment property (location, demand/supply, interest rates etc.), one will also have to factor in additional considerations such as exchange rate fluctuations and even the economic and political situations of the country concerned. 

So in our opinion, the takeaways from EcoHouse are:

1. When something sounds too good to be true, it usually is
Although foreigner property developer/marketer may entice you with attractive return/yield expected on their project, the wife and I have yet to come across anyone who offers us 20% fixed-rate of return within 12 months. And even if we did, we have to ask ourselves whether such "offers" are realistic and sustainable as a business model.

2. Do your own homework and make informed decisions
Find out as much as possible about the foreign property that you intend to put money into. This is not limited to just details of the project itself but also the credibility of the developer concerned, e.g. are they reputable in the market? how many projects have they developed? how well-received are their previous projects? It will also be helpful to know what the locals think about the said project - you be surprised how much information you can actually obtain just by Googling the project or developer.

3. Experts are but human
They are not right all the time! So do not go into a purchase or participate in any "co-investment" schemes simply because someone who is supposedly an expert in property investment tells you to do so. The EcoHouse episode is a good example of how even the so-called "expert" can get it wrong.  

Caveat Emptor!

Sibor rates increase starting to bite?

- January 8, 2015 No Comments

More homeowners who took housing loans from banks are now looking for refinancing options. Loan specialists said they have been getting more inquiries since the recent spike in SIBOR (Singapore Interbank Offered Rate).

Homeowners - whose mortgages are tied to SIBOR - are now facing higher monthly payments. One of those affected is 30-year-old engineer Lai Ming Kwan, who bought an executive condominium with his wife two years ago and he opted for a bank loan that is tied to SIBOR.

With the benchmark rising sharply in recent days, Mr Lai is concerned about how it will affect him. He said: "They predicted that it will stay at 0.3 per cent to 0.4 per cent for a few years. I did not expect it would go up to so high ... SIBOR is increasing so fast that my pay cannot catch up with the financing rates."

Both Mr Lai and his wife are working and have a 16-month-old child.

"Expenses, lifestyles will have to change a bit because I have to save up more to contribute to the housing loan ... so there'll definitely be an impact, maybe less shopping. With the child coming up, there is also school fees, childcare fees, so the depletion will come from my savings. Having a second child will also mean more expenses," he added.

Some homeowners, like Mr Lai, cannot look into other financing options yet because their loan deal has a lock-in period, which requires them to stick to the same bank for a couple of years. However, loan specialists said that those whose lock-in periods are up are already starting to look at refinancing options. This can include looking for a housing loan with fixed interest rates instead of being tied to one with variable rates.

One mortgage consultancy said that it has received many inquiries on refinancing in recent days, about 30 % more when compared to last year. Mr Sean Lim, the mortgage consultant head at iMoney, said: "They want to know what is happening in the market ... So they are taking time to digest and understand what is happening in the market.

"The pace of increment did catch me by surprise. But it is also half-expected. The trend has been going up slowly over the last six months. Looking at the market trend, it will continue to go up."

With interest rates rising, banks can be expected to review their mortgage rates and plans. Analysts said that potential home buyers or those who are hoping to refinance their housing loans should choose a package that best suits their financial needs. 
Source: CNA

Just isolated cases of home owners stretching themselves too thin financially, or a sign of things to come..?

Visit to the Bijou site

- January 7, 2015 No Comments

The wife and I have visited the sales gallery of Bijou this week and after which, we decided to swing over to the actual site of the project to take a look.

Here are some photos we took of the site and its surroundings.

As we had mentioned in our previous post, the actual site of Bijou is located 
at the junction of Jalan Mat Jambol and Pasir Panjang Road - 
directly across from Pasir Panjang MRT station.

Entrance into the project will be along Jalan Mat Jambol, which is a slip road that 
leads into a residential enclave consisting of landed housings and condominiums. 
The road will also take you across to South Bouna Vista Road - where the 
famous boneless duck rice stall used to be.

The first observation that we made of the site is how small the plot of land is - we reckon that it is smaller than the size of a football field and are amazed by how the developer is able to squeeze 120 units (despite the relatively small unit sizes) into the 5-storey project.

For those wondering about the "view" that you will get from the apartments, units facing the front (i.e. main Pasir Panjang Road) will get either the Pasir Panjang Road view (lower-floors) or the West Coast Highway overpass view (the higher-floors). Some luckier apartments may be accorded with pocket sea-view on the right-hand side, amid all the cranes and containers.

Units at the back of the project are likely to face the private homes behind, which to the wife and I, is a much better view than what you get facing the front. Residents in these units are also likely to enjoy more peace and quiet, given that they do not face the busy Pasir Panjang Road/West Coast Highway. The one disclaimer that we need to make though, is that there is an adjacent plot of empty land behind the Bijou site - so there is a chance that the view of apartments facing the back may be totally blocked if the government decides to tender out this piece of land for property development. 

Overall speaking, the wife and I are not overly impressed with the location of Bijou
Yes you do get the convenience of a MRT station directly across the road (a big plus) 
but you also have to contend with the inconvenience of living right next to a 
busy vehicular overpass (a big minus).

We will post the review of our showflat visit in due course...

So what's in store for private home prices in 2015?

- January 6, 2015 2 Comments

Private home prices fell 1% in the three months to Dec 31 last year, but it came as no surprise to analysts.

The decline was higher than the 0.7% dip in the previous quarter, but experts reckoned that the slowdown was characteristic of the last quarter, thanks to the year-end holiday period, ailing demand and curtailed home financing.

The Urban Redevelopment Authority's property price index for the full year showed on Friday that prices slipped a total of 4% for the whole of 2014 and 4.9% in five straight quarters of declines.

Here are what some market watchers say will be in store this year:

Ms Chia Siew Chuin, director of research & advisory, Colliers International:
The moderated private residential property transaction levels and price corrections are seen as better aligned with the slower rate of economic growth, which has slowed to a weaker-than-expected 2.8% this year - an indication that the market is being steered from a state of excess exuberance seen in the not-so-distant-past towards greater stability and sustainability.

With various downside headwinds expected to keep a lid on home-buying demand, prices of private residential properties are expected to remain on a path of moderation in 2015. These include the continued enforcement of cooling measures amid the tightened credit environment, a mounting supply of new homes, a weak leasing market and the impending rise in interest rates. Barring external shocks and surprises, prices are expected to moderate by between 5% and 8% in 2015.

Mr Desmond Sim, research head, South-east Asia, CBRE:
We expect prices to continue falling but not at a faster rate because developers and re-sellers have not pressed the panic button yet. General indicators of economic activity have still be positive, mortgage rates are still very low - so there's no distress yet.

Our point of view is, no matter how much prices have changed, there have been more sales of between $800,000 and $1 million than any other transaction in the market, so affordability is still there and developers are still creating such products for the market. New launch activity, however, will be like the fourth quarter last year - minimal. Developers do not want to eat into each other's pie when demand is low.

Mr Nicholas Mark, research head, SLP International:
Unfortunately, we could see more of what happened in the second half of 2014 - weak demand in the private housing market and a gradual price decline, unless the Government were to adjust housing policies. The cooling measures are for a stable property market, but there are growing questions over just how much prices should to reach a stable market.

I think the Government should let stakeholders in the market know what is the end point, since we have such a high rate of homeownership here. The group that will be worst hit are investors who have high bank borrowings and cannot sell the property because of the seller's stamp duty. We could see more mortgagee sales this year, as a result. There will be people who will be happy, such as the buyers, but they will also be trying to catch the market at the lowest point. So demand will still be weak and falling prices will become a self-fulfilling prophecy.
Source: BT

The above may be "old news" to some of you as the report was published some 5 days ago (while we were on vacation).

And in the spirit of the New Year, the wife and I have decided to throw our hats into the ring with our "non-expert" views on what's in store for this year:

We expect 2015 to be an even more challenging year for the private home market (tell me something I don't already know, you may say). Prices and rental yields will remain depressed for a whole host of reasons, chief of which is the deluge of new units that is expected to come onto the market this year. Next comes the various economic and political uncertainties that continue to evolve around the world. And not forgetting the continual weakness of the Sing$ against the greenback, as the United States prepare to raise interest rates.

And speaking of Interest rates, the Sibor rates are expected to continue rising given the weakening Sing$, resulting in higher monthly loan repayments for home buyers/owners this year.

The wife and I were watching the news this evening and it was estimated that for an existing home loan of S$500K with a 20 years tenure remaining, an increase in mortgage rate from 1.5 to 2% will lead to an increase in monthly loan instalment by some S$120. If mortgage rate rises to 3%, the monthly instalment will increase by S$360!

The home-loan rate increase will put additional pressures on new and existing home owners, which may further dampen interests in the new and even resale home markets. Things may get even worse should the Sing$ depreciates more or if the Feds decide to hike its interest rates sooner or more severely than generally expected.

With regard to the property market cooling measures, the Government has indicated that they are unlikely to move on the existing measures in the near to middle term. So no reprieve expected for both buyers and developers anytime soon. Policy wise, we expect the Government to enact new rules to ensure better transparency when comes to developers' sales - so no more hiding behind ABSD and other rebates to try and project a higher-than-actual psf prices.

And on the new projects' front, the wife and I expect developers to continue testing the lower boundary when comes to apartment sizes - all in the name of making apartments more affordable to buyers, quantum-wise. So 3-bedder units of 700sqft or less may become the norm in 2015(?)

Now for the million-dollar question: How much will prices drop in 2015? To borrow a phrase from Ms Chia Siew Chuin, "Barring external shocks and surprises", the wife and I expect private home prices to fall by some 8 - 10% in 2015. This may seem a tad more pessimistic than what the professionals expect, but we believes that the tremors seen in the private home market since August 2014 is just a precursor to bigger problems ahead in 2015.

So what's your view on 2015?

Remember the one about "interest rates are going to rise"..?

- January 5, 2015 No Comments

Local interest rates have been on a slow upwards creep, and on the first working day of the New Year, rose to a 52-week high as the Singapore dollar continues to weaken against the greenback.

The key three-month Sibor, or Singapore interbank offered rate, on which most home loans are pegged rose to 0.45738% on Jan 2, up 17.6% from the low of 0.38885% on Feb 21.

The benchmark rate had been flatlining for much of the first half of 2014 until it began its slow rise from August, then picked-up pace steadily as the USD rallied. The SGD has fallen to four-year lows against the USD. At last Friday's 1.328, it is down more than 7% from last year's July 23 high of 1.238.

Observers say Singapore interest rates are now tied to the strength of the USD and will move further up even in the absence of rate hikes from the US Federal Reserve. Expectations are for the US Fed to raise rates in the second part of this year.

OCBC's forecast for three-month Sibor is 0.55% and 0.69% for mid- and end-2015, respectively.

DBS projects that the SGD will head to 1.33 by fourth quarter 2015 and 3-month Sibor to reach 0.60% then.

UOB is more bearish - it expects that the start of the US interest rate normalisation in June next year will see further downward pressures on the SGD this year. This will in turn see Sibor moving on a higher trajectory in 2015. UOB expect the three-month SGD Sibor to move towards 1.00% by end 2015.

Should home loan borrowers worry? Some say the pace of the increase could be a concern but as long as the absolute interest rate remains low, the hike in monthly instalments should be manageable.
Info source: BT

Although many will probably brush this off, but the wife and I certainly won't bet against a "perfect storm" of the US Fed raising their interest rates earlier/higher than expected while the USD continues its rampage against the SGD. If that happens, the absolute interest rate and monthly mortgage instalments may not stay as manageable as earlier thought.

And it may be timely to revisit those fixed-rate loan packages again...

Goodbye Thomson Three...

- January 4, 2015 No Comments

The showflats, that is (relax lah!).

Looks like UOL/Singland have sold enough units for them to dispense with the sales gallery.


And while one site is being torn down, another is busily being built.

Over at the actual site of Thomson Three, construction is well under way. Blocks 41 and 43 are already built up to almost 10-storey. 


And here's a closer look at the individual units under construction.

Click on link below to read our review of Thomson Three:

Have a great week ahead, everyone!

"Bare" EC/Condo unit, anyone?

- January 3, 2015 No Comments

A report in BT today said that developers are cracking their brains for innovative ways to move their unsold units amid the sluggish property market.

One such has come up with the idea of shaving $25 - 45K off the usual selling price for its EC projects by offering the apartments bare, i.e. without interior fit-outs or floor finishing.

The discount is to attract buyers who have become price-sensitive as a result of the more stringent mortgage financing requirements.

But as one market analyst has pointed out, such "atypical marketing strategy" may only improve sales slightly, e.g. for those who are unable to get sufficient loans under the current financing cap. However, it may not gain traction with most other buyers as one of the draws of buying a new EC or condo unit direct from developers is that it comes well fitted out. So despite getting a discount for buying a bare unit, buyers of such will still have to fork out money for renovation, which in the end may negate the original savings.

Buying a developer's unit and being relieved of the hassle (and cost) of renovation is definitely a big plus. But the wife and I reckon that some buyers who are not constrained by financing may also find the idea of a "bare unit" attractive, as this gives them more freedom to "differentiate" their units from their neighbors. The key question is how much of a discount will incentivize this group to take up the option -  a $25 to 45K discount is definitely a tad low in our opinion.

Will you buy a "bare condo unit" from developer?

If so, how much discount will you expect compared to a fully-fitted unit? 

Prices for private homes fell 4% in 2014!

- January 2, 2015 No Comments

Private residential property prices fell 1% in the fourth quarter of 2014, according to Urban Redevelopment Authority (URA) flash estimates released on Friday (Jan 2) - a larger decline than the 0.7% slide in the previous quarter, and the fifth consecutive quarters of price decreases.
For the whole of 2014, prices have fallen by 4%, the URA said.
Overall, the private residential property index fell 2.1 points from 207.9 points in the third quarter to 205.8 points in the fourth quarter.
Prices of non-landed private residential properties declined in all market segments. In the Core Central Region (CCR), prices fell 0.9%, higher than the 0.8% decline in the previous quarter. Prices in Rest of Central Region (RCR) fell 1.2%, compared to the 0.4% decline in the previous quarter. In Outside Central Region (OCR), prices fell 0.9%, a greater slide than the 0.3% decline in the previous quarter, according to the URA.
For the whole of 2014, prices in CCR, RCR and OCR have fallen by 4.1%, 5.2% and 2.2%, respectively. Prices of landed properties fell 1.1% compared to the 1.8% decline in the previous quarter. For the whole of 2014, prices of landed properties fell by 5.2%, the URA said.
The flash estimates are compiled based on transaction prices given in caveats lodged and survey data on new units sold by developers during the first ten weeks of the quarter.
The statistics will be updated four weeks later, when the full real estate statistics for the quarter are released by the URA. "Past data have shown that the difference between the quarterly price changes indicated by the flash estimate and the actual price changes could be significant when the change is small. The public is advised to interpret the flash estimates with caution," said the URA.
So 4% in 2014... "?" % in 2015??