Issue 139

Copyright 2011-2013 www.Propwise.sg. All Rights Reserved.

CONTENTS
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Property Market in 2014 A Watershed Year?
Singapore Property News This Week Resale Property Transactions (January 1 January 7)

FROM THE

EDITOR

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SINGAPORE PROPERTY WEEKLY Issue 139

Property Market in 2014 A Watershed Year?

By Property Soul (guest contributor)
The property market in 2014 started with a series of bad news from the Urban Redevelopment Authority (URA) and the Housing and Development Board (HDB).

How bad are the numbers?

On 2nd January 2014, HDB announced that the HDB Resale Price Index continued to drop in the 4th Quarter of 2013. The 1.3 percent decline was the worst since eight years ago in 2005. The URA also released disappointing estimated figures of private home sales in the 4th quarter of 2013. The Private Residential Property Price Index fell 0.8 percent.
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SINGAPORE PROPERTY WEEKLY Issue 139 Even the usually resilient landed home market had its price index drop 1.2 percent from the previous quarter. Overall, luxury homes were the worst performer with prices falling by 2.1 percent last year. Residential units sold in the prime districts were down 20 percent compared with 2012. In the entire year of 2013, private home prices only grew by a humble 1.2 percent. What a frustrating fact for investors who just bought in 2013! If they have put their money in a Singapore dollar 12-month fixed deposit account at the start of 2013, they could have enjoyed a comparable 1.1 percent interest rate from the bank minus the hassle to calculate their total debt, the expenditure to pay all transaction costs, and the risk to face any volatility in the market. When market sentiment turns bearish With the market losing steam, market players who were once optimists suddenly turned pessimistic. Industry analysts who shared their optimistic view on the property market not long ago have changed gears to paint a bleak market outlook that echoes with the URA figures. Their forecasts on the decline of private home prices in 2014 vary from a slight drop of a one digit figure to a big slump of 40 percent. Local property developers may be the only party who remain consistently optimistic. They are reluctant to admit any market weakness, claiming that prices are unlikely to be reduced in the coming new launches, though many have quietly done so in recent projects.

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SINGAPORE PROPERTY WEEKLY Issue 139 Meanwhile, property agents are reminding buyers that this is the right time to buy while asking sellers to lower their price expectations, hoping to close as many deals as possible before the rainy days. The all-too-obvious culprits It is not a difficult task for industry analysts to explain what have contributed to the softening of the market. It is all too convenient to blame the imposition of ABSD (Additional Buyers Stamp Duty) and TDSR (Total Debt Servicing Ratio) for the poor private home sales. The declining COV (Cash-Over-Valuation) of HDB flats is also a big deterrent for HDB upgraders. For HDB flats, anyone can see why prices dropped simply by reviewing the cooling measures rolled out last year, particularly the cap of 30 percent for the Mortgage Servicing
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Ratio and 25 years for HDB mortgage loan tenures. And thanks to the government who keeps reminding the public every now and then that there will be an increasing supply of Build-to-Order flats and building of new HDB flats. But they are all wrong. The depressing numbers shouldnt come as a surprise to anyone. In fact, things have been incubating before 2013 and well before the introduction of the latest cooling measures. There are at least three hints that show a possible reversal in market direction:

1. Properties for sale have an obviously longer shelf life compared with their prime days;
2. A gradual reduction in the volume of sales transactions, especially in resale units; and
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SINGAPORE PROPERTY WEEKLY Issue 139 3. The rise in properties prices has slowed down, and prices have remained almost the same for consecutive quarters. And all of the above have been happening in the market since 2012. How strong are the external forces? Macroeconomic factors have been overused to explain what is happening. The withdrawal of QE, drain of hot money, rise of interest rates these are topics that people pick up all the time. But to what extent are they responsible for the softening local property market? There is talk and predictions about the upward movement of interest rates. But how much exactly have interest rates increased for the whole year? Look at the global economy, have we seen any real big changes in the US and European markets? What about Singapore? Did our economy, including GDP, export, retail, etc. change much during 2013? What the future holds Unlike the stock market, the ups and downs in properties do not happen overnight. And unless there is a big disaster or a financial crisis, we are unlikely to see a dramatic market crash. Time is needed to sell a property and to complete a sales transaction.

If foreigners buying private residential properties in Singapore are well below 10 percent of the total number of units sold, how significant can tapering QE or retreating hot money affect property prices?

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SINGAPORE PROPERTY WEEKLY Issue 139 It will be a few months or even a few quarters before a clear direction can be seen. Is the once red-hot property market approaching a corner and going to turnaround soon? The property market has definitely reached a crossroad. Time will tell whether the 4th quarter of 2013 is the turning point for a steep downward trend, or only a short-lived hiccup in a stable market. By guest contributor Property Soul, a successful property investor and enthusiast who shares her experiences and knowledge on her blog.

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SINGAPORE PROPERTY WEEKLY Issue 139

Singapore Property This Week

Residential
All 281 units of Hillford sold All 281 units at 60-year leaseholdThe Hillford, Singapore's first retirement resort, were sold within five hours on Jan 18 from about 1,000 prospective buyers with earlier indicated interest. The average price for the units is $1,100 psf. 186 of all the units are in onebedroom configurations, with size from 398 to 431 sqft, and a starting price of $388,000. 52 two-bedroom units from 506 to 560 sqft had starting prices of $498,000, and the rest 40 two-bedroom dual key units of 657 sqft in size had starting prices of $648,000. Even though the lease is only 60 years, prospective buyers cited affordability as the main driver for their decision to buy a unit. The Hillford is expected to get its Temporary Occupation Permit in November 2017.

(Source: Business Times)

Rental yields of non-landed private homes down According to the Singapore Real Estate Exchange (SRX), rental yields for non-landed private homes dropped below the 4 percent psychological mark to stand at 3.9 per cent in 2013, from 4.2 percent in 2012.

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SINGAPORE PROPERTY WEEKLY Issue 139 SRX co-founder and chief technology officerJeremy Leesaid that 4 percent for rental yields is the psychological barrier for many investors seeking income from residential properties. Above 4 percent, investors would be able to justify the risks inherent in property as an asset. Below 4 percent, investors would worry that inflation affects their gains. 31 out of 34 planning areas witnessed a weakening in median gross rental yields. (Source: Business Times) HDB subletting quota framework for noncitizens is out The Housing & Development Board (HDB) released the details of the subletting quota framework for non-citizens on Jan 16 - the number of flats that can be wholly sublet to non-citizens is now capped at 8 percent at the
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neighbourhood level, and 11 per cent at the block level. This applies to subtenants who are Singapore permanent residents (PRs) and foreigners.Malaysians are exempt because they are able to better integrate due to their cultural and historical similarities with Singaporeans. The details reflect the governments efforts in preventing the formation of foreigner enclaves in HDB estates. However, the quota would not apply to subletting of rooms to reduce the impact on those who rely on subletting for additional income, for example the elderly and lowincome households.

(Source: Business Times)

Private home sales decline Developers' private home sales decreased to only 259 units (excluding executive condominiums - ECs) in Dec 2013,
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SINGAPORE PROPERTY WEEKLY Issue 139 compared with 1,271 units in November and 1,410 units in December 2012. This figure is also the lowest since Jan 2009 with 109 units. Despite its being worse than market expectations, there is no panic apparently. Agents believe that the December drop was mainly due to developers' strategy of holding back launches and gathering interest first. Developers only launched 118 new private homes in Dec 2013, the least since the Urban Redevelopment Authority (URA) started to release monthly developer housing sales data in June 2007. (Source: Business Times) Government not likely to unwind cooling measures At The Business Times-MaybankKim Eng Invest Asia 2014,Maybank Kim Eng head of research Ng Wee Siang said that the
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government is not likely to unwind any of its property cooling measures in 2014, as long as interest rates remain where they are now. The government may reduce the number of private homes and HDB flats in the longer term instead. This comment comes amid a call for the government to relax its property cooling measures. (Source: Business Times) Private resale home prices continue to slip Flash figures by the Singapore Real Estate Exchanges (SRX) showed that prices of private resale homes continued to decline in Dec 2013 for the fourth month, led by decrease in the core central region (CCR). Home prices in the city area decreased 2.3 percent, followed by those in the Outside Central Region (OCR) which decreased 1 percent.
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SINGAPORE PROPERTY WEEKLY Issue 139 Homes in the Rest of Central Region (RCR) rose 2.9percent. Overall, the price index eased 0.2 percent in Dec 2013.As the Total Debt Servicing Ratio (TDSR) framework and other cooling measures take their toll, consultants believe that this trend is likely to continue this year. (Source: Business Times) Bartley site receives top bid of $648 psfppr The site near Bartley MRT Station received the top bid of $648.30psfppr from UOL, which was 3.7 percent higher than the secondhighest offer of around $625 psfppr by EL Development.These two top bids were also quite higher than the next five bids. The sixth highest bid was from a partnership between City Developments Ltd (CDL) and TID, standing at $463 psfppr. These two
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companies, together with Hong Leong Holdings, previously bought two nearby sites one for nearly $621 psfppr (which is now being developed into Bartley Residences), and the other for $495 psfppr (which is now being developed into the Bartley Ridge project). (Source: Business Times) Commercial MRT network premium erodes prime offices

As Singapores MRT network is expanding to improve accessibility across the island, the rental differences between prime office and decentralised office space are expected to erode. In Q4 2013, gross average office rents in Tampines were 46 percent lower than Raffles Place;

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SINGAPORE PROPERTY WEEKLY Issue 139 those with office space in Jurong East had 25-35 percent discount off Raffles Place rents. DTZ data showed that office spaces closer to town had smaller differences: Novena rents were 15 percent lower than Raffles Place; Buona Vista and HarbourFront were 18 percent and 21 percent lower respectively.The premium that Raffles Place commands has been decreasing over time. (Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 139

Non-Landed Residential Resale Property Transactions for the Week of Jan 1 Jan 7
Postal District 5 9 9 9 10 10 10 10 11 13 14 15 15 15 16 17 17 17 17 19 19 19 19 Area (sqft) 398 1,023 667 936 2,034 1,625 2,982 1,744 1,238 1,701 1,141 958 657 1,981 1,690 1,636 1,324 1,948 1,485 1,259 1,184 1,938 1,238 Transacted Price ($) 690,000 2,210,000 1,260,000 1,688,888 5,660,000 3,000,000 5,180,000 2,880,000 1,840,000 2,300,000 800,000 1,580,000 825,000 1,750,000 1,900,000 1,700,000 1,150,000 1,638,000 1,007,000 1,620,000 1,190,000 1,680,000 1,050,000 Price Tenure ($ psf) 1,733 FH 2,161 FH 1,888 FH 1,803 99 2,782 FH 1,846 FH 1,737 FH 1,652 FH 1,486 99 1,352 FH 701 FH 1,649 FH 1,256 FH 884 FH 1,124 FH 1,039 FH 869 FH 841 FH 678 99 1,286 99 1,005 FH 867 FH 848 99

Project Name PARC IMPERIAL RIVERGATE THE INSPIRA LEONIE STUDIO THE BOULEVARD RESIDENCE THE SOLITAIRE ST MARTIN RESIDENCE THE MARBELLA AMARYLLIS VILLE AVON PARK GOODVIEW APARTMENTS ONE AMBER IVORY MABELLE THE BAYCOURT THE GALE CARISSA PARK CONDOMINIUM BALLOTA PARK CONDOMINIUM LOYANG VALLEY KOVAN RESIDENCES NOUVELLE PARK EVANIA COMPASS HEIGHTS

Postal District 20 21 21 21 23 23 26 26

Project Name GOLDENHILL PARK CONDOMINIUM THE CASCADIA MAPLEWOODS SUMMERHILL MI CASA PALM GARDENS MEADOWS @ PEIRCE CASTLE GREEN

Area (sqft) 1,539 1,184 1,507 1,550 990 1,345 3,035 1,152

Transacted Price ($) 2,200,000 1,963,000 2,118,000 1,650,000 960,000 1,158,000 2,518,000 950,000

Price Tenure ($ psf) 1,429 FH 1,658 FH 1,405 FH 1,065 FH 969 99 861 99 830 FH 825 99

NOTE: This data only covers non-landed residential resale property transactions with caveats lodged with the Singapore Land Authority. Typically, caveats are lodged at least 2-3 weeks after a purchaser signs an OTP, hence the lagged nature of the data.

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