August private homes resale prices hit record high!

Resale prices of private homes have surged to record highs in August.

This is despite a slew of property cooling measures introduced by the government, including recent curbs on housing loans.

Still, analysts are mixed on their outlook on where private property prices are heading.

Prices of private non-landed residential resale units climbed 1.5% last month, according to data compiled by the Singapore Real Estate Exchange (SRX).

This follows a 0.5% decline in the previous month.

Yet, the number of homes changing hands last month dipped marginally.

540 private homes were sold in the resale market in August, slightly lower than 573 units transacted in July.

Recent loan curbs were cited for slowing down the market.

Jeffrey Hong, CEO of GPS Alliance, said: “I think the resale property prices in the next 1-2 months will basically be very stagnant. Buyers are waiting along the sidelines to watch for any good buy or prices dropping further... I think towards the end of the year, I would see some price corrections but not by a lot. I think it's about 3-5%.

Introduced in June, the total debt servicing ratio (TDSR) framework limits how much property buyers can borrow to buy homes. Banks now have to check if a borrower's total repayments of car, student or mortgage loans do not exceed 60% of their gross income.

Other market watchers said the TDSR has also pushed buyers to look for smaller units - those costing between $800,000 and $1 million in August. The upper range is expected to increase to $1.2 million.

However, this means units sold would record higher prices on a per square foot basis.

The resale market saw price increases across all locations.

Private home prices in the city fringe led the market with a 2.4% gain.

This is followed by resale prices of homes in the city - at a 1.8% increase.

Mass market resale home prices inched up 0.2% last month.

Going forward, analysts expect prices of suburban homes to remain stable at current levels.

Lim Yong Hock, key executive officer at PropNex, said: “I think the developers and home buyers are now very cautious, especially now with the latest news of the recent announcement of TDSR. First of all, the developers know it's for the mass markets, so the price cannot be too high. I don't think the price will go down with the fact that land bid prices are still remaining strong and developers are still confident in the future.”

On Thursday, a land tender for a mixed use site in Yishun beat market expectations with a top bid of $1.43 billion - 43% higher than the second highest bid.

Source: Channel News Asia

Speaking of TDSR, the wife and I have experienced first hand how stringent the restriction can be. With only a small car loan and a remaining mortgage of about 30% of the current valuation of our property, the maximum refinancing that we can obtain from our bank is another 20% of our current valuation! However, TDSR does not apply for overseas property purchase so it is no wonder that more and more local buyers are looking outwards.

Private resale dips in May!

Prices of resale private homes softened in May as the government's cooling measures continued to dampen the market.

Non-landed private residential units showed an overall price drop of 0.5% in May compared to April, according to data from major property agencies compiled by the Singapore Real Estate Exchange (SRX).

Prices of resale non-landed private homes in the city area dropped 0.5% over the previous month while those in the city fringes declined 0.4%.

However, prices of resale suburban private homes remained resilient, reporting a 0.3% increase.

The SRX projected the final volume figure in May to be around 750 units, which would exceed the 671 units sold in April. This would still represent a 40% drop from the same period last year. There were 1,292 non-landed resale cases in May 2012.

Orange Tee's Head of Research & Consultancy Christine Li said the stand-off in the resale market could be due to the mismatch in expectations between buyers and sellers, who are still reluctant to reduce asking prices amid record property prices.

As a result, buyers prefer to buy directly from developers who are offering discounts and incentives.

Meanwhile, overall rental prices for non-landed private residential in May slipped 0.6% from April, marking a fourth consecutive monthly drop in overall rents.

Ms Li expects rentals to slide further in the upcoming months, given the strong pipeline of new private homes slated for completion this year.

Source: Channel News Asia

First it was sub-sale, now both resale and rental continue to soften. Are we finally heading down the "cannot sell cannot rent" road..?

Resale markets continue to slow in April

Singapore's resale property market continues to slow as buyers remained on the sidelines after the government's latest round of property cooling measures.

Flash figures from the Singapore Real Estate Exchange (SRX) revealed that transaction volumes in both private and HDB resale markets fell last month.

Prices stayed fairly resilient as the overall median price of resale HDB flats inched up, while prices of resale private homes declined marginally in April compared to March

Meanwhile, analysts say a continued drop in HDB cash-over-valuation (COV) and slowing volumes are indicative of an imminent correction in HDB prices.

COV for HDB flats fell for the third consecutive month in April, according to SRX.

At $30,000, April's COV is at its lowest value since September 2012.

Still, overall median resale price of HDB flats inched up 1.1% to reach $465,000 in April. Resale volumes of HDB flats remained stable, with 1,271 units sold.

Year on year, transaction volumes slumped 36%. There were 2,000 HDB resale flats transacted in April 2012.

Earlier this year, the government lowered the mortgage servicing ratio (MSR), from 50 to 30%.

Mohammad Ismail, CEO at PropNex, said: "On average, banks would give 50% of someone's income to finance the monthly installment but that has been reduced to 30% and that's a drastic drop...and that causes a lot of people to think twice. It is very glaring that the public housing is heading for a correction in price. In another word, the heyday of double-digit growth is over. For that matter, even last year's 6-over percent growth is not likely to be repeated. Moving forward, public housing will probably experience low growth of probably 3 to 4%.

"The first quarter recorded the lowest volume of transactions in 15 years. We only recorded about 4,300 transactions whereas last year the average was in the tune of 6,500."

Meanwhile, resale transaction volumes for non-landed private homes in April slowed to 572 units, compared to the 614 units sold in March.

Year on year, this represented a more than 50% drop. There were 1,240 non-landed resale units in April 2012.

Donald Han, CEO of HSR Property Group, said: "This is directly impacted because of government measures on January 11. Investors who have properties are more reluctant to release these properties into the marketplace and because of that there has been a lack of supply for secondary markets that are available for transaction.

"A lot of investors are holding back the selling of secondary market property because if they sell it, it would be harder for them to buy back again because they would be imposed 10% ABSD for the second property."

Month on month, prices of resale private homes dipped 0.4% in April.

Resale prices of suburban private homes climbed 1.0% to end at $1,022PSF. But this was more than offset by declines in the city area and city fringes.

Both CCR (core central region) and RCR (rest of central region) saw equivalent price drops of 1.9% over the previous month to reach an average per square foot of $1,772 and $1,267 respectively.

This is the fourth consecutive monthly drop for CCR since its price peaked in December 2012.

Analysts say this is due to falling demand from foreign investors and permanent residents - who typically buy property in the core central region - as they have been affected by the additional buyer's stamp duty, where they are charged between a 7 and 15% tax.

Analysts say the resale private property market is likely to remain quiet as buyers continue to turn to new sales.

Source: Channel News Asia

 

 

On a related note, our de facto business newspaper has reported that overall rental prices slipped 1.0% in April. rental prices fell by 4.4% in RCR and by 0.9% in Outside Central Region (OCR) areas. But in CCR, rents picked up 2.1% to $4.79psf.

 

Rental yields softened in both RCR and OCR, while yields in CCR continued their climb to reach 3.25%. Despite yields softening, RCR still showed the highest gross yield of 3.73% as at April, followed by OCR's 3.68%.

 

Looking ahead, rents may soften further as more projects are completed, and as the tightened quota on foreign workers kicks in, leading to fewer of them coming here and needing accommodation.

Further, given that the supply of suburban homes has significantly increased, this will keep suburban rental prices down.

 

Not so good news for property investors...

 

 



Resale prices in March fell 2%

Prices in the resale private property market fell just two per cent in March compared to February, according to data from major property agencies compiled by the Singapore Real Estate Exchange (SRX).
But resale volumes in March jumped 87% from February.
The drop in resale private home prices was led by those in the suburbs, where resale prices fetched $1,071psf, 3% lower than in February. Non-landed private homes in the city area were resold at an average of $1,788psf or two per cent lower than the previous month. Prices of those in the city fringes remained unchanged at $1,301psf.

Analysts Channel NewsAsia spoke to said the marginal movements in property prices are the intentions of the latest cooling measures, where the additional buyers' stamp duty was raised by between five and seven percentage points across the board from January 12.
  
ERA's key executive officer, Eugene Lim, said: "What is holding back buying decision is perhaps a mismatch of expectations, especially in the resale market. There is not much compelling reason for sellers to drop prices. Why? Because we are still having economic growth, full employment; holding cost is cheap. But on the other hand we have buyers who are expecting a big cut in prices because of the cooling measures. It is a normal market response."

In March, 609 resale private home transactions were recorded - some 87% higher than in February. This was due to fewer resale transactions in February over the Lunar New Year holidays.
But the number of resale transactions in March is just half that of the same period last year. OrangeTee's CEO, Steven Tan, said: "If this trend continues and coupled with the large supply of completed projects in the next few months, the resale prices will face more pressure. The performance of the resale market will depend on the primary market in the next few months. If prices continue to go up, it will make some buyers change their minds to switch over to resale market."
On a quarterly basis, 1,982 resale units were transacted in the first quarter of 2013, compared to the 2,074 units moved in the first quarter of last year. But volumes in the first quarter were down 39% from the fourth quarter last year.

Meanwhile, overall rental prices for non-landed private homes in March remained largely unchanged from February.

Experts say they will be keeping a close watch on the market in the second quarter, when sales are typically more brisk as launches pick up.

Over in the market for new private home launches, incentives offered by developers to offset the impact of the cooling measures appeared to have met with some success.
DWG estimates that developers moved some 5,000 homes in the first quarter of this year. That's some 12.5% more new homes compared with the fourth quarter of 2012.

Source: Channel News Asia

And speaking of rental, the wife and I have heard from various sources (both investors and agents) that the market is definitely softening. Apartments in the city area that were commanding $15k a month in rental just last year are now asking for between $10 - 12k, while those in D21 are now asking for $4 - 4.5k, down from the previous $5k. With the slew of new developments coming on stream this and next year and the tightening of foreign labor coming into Singapore, we foresee continual black clouds hovering over the rental market.