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Analyst: HDB resale prices may have hit bottom
Flash estimates of the HDB Resale Price Index (RPI) for the third quarter of 2015 shows a 0.3 percent drop in prices of Housing Board flats from the previous quarter.
The Index currently stands at 134.6, down from 135.0 in Q2, marking the eighth consecutive quarter of price decline.
The RPI is an indicator of general price movements within the resale public housing market.
Commenting, PropNex Realty chief executive officer Mohamed Ismail said the decline in resale prices is due to the combination of property cooling measures to stabilize the market.
These include reducing the Mortgage Servicing Ratio (MSR) cap of 30 percent and the maximum loan term of 25 years for HDB mortgage loans, the three-year wait for new PRs before they can buy resale HDB flats, and allowing singles to buy new 2-room flats in non-mature estates. He added that the increased supply of Build-To-Order (BTO) flats has helped push down resale flat prices.
“Over 90,000 BTO flats were launched between 2011 and 2014. And in 2015, HDB will launch approximately 20,000 new flats for sale – such huge supply would have further taken away demand from the resale market, thereby stabilising prices.
“In addition, the Sale of Balance Flats (SBF) programme has also offered a good number and variety of choices for first- and second-time buyers.
“We continue to expect resale prices to fall for the next quarter of the year, but prices may have reached a bottoming-out level as this is the lowest decline in more than two years.”
In November, some 7,000 BTO flats in Bidadari, Bukit Batok, Choa Chu Kang, Hougang, Punggol Northshore, and Sengkang will be launched for sale. The HDB will also offer around 5,000 balance flats in a concurrent SBF exercise.
With the large influx of home completions starting from next year, along with the continued enforcement of government measures, Ismail expects HDB resale prices to soften about 3.0 percent this year, with sales volume hitting around 19,000 to 20,000 units due to the lower asking prices.
HDB noted that the RPI and more detailed public housing data for the quarter will be released on 23 October.
New housing policies a priority: Wong
New National Development Minister Lawrence Wong has pledged to continue the good work started by his predecessor Mr Khaw Boon Wan.
“Boon Wan has done an excellent job in achieving a soft landing for the housing market. But the job is not done,” he wrote in his first blog post as MND minister.
“I will continue the work, and I hope Singaporeans will give me suggestions and feedback so we can be even better.”
He revealed that his priority in the immediate term is to oversee the successful implementation of the 2-room Flexi scheme and recent policy changes that will take effect in the November Build-To-Order (BTO) exercise, and that work has already commenced on the Fresh Start Housing Scheme.
“We will announce the details in due course so that families with young children in rental flats can become homeowners again.”
And while providing affordable, quality homes remains a priority, improving HDB towns built in the 70s and 80s will also be his focus, he said.
Nonetheless, Mr Wong vowed to keep MND’s tradition of listening, consulting and engaging all stakeholders.
Private home prices down 8% from 2013 peak
The Urban Redevelopment Authority’s (URA) flash estimates for the private residential property price index for the third quarter this year stands at 142.3, down from 144.2 during the previous quarter.
This represents a drop of 1.3 percent compared to the 0.9 percent decline seen in Q2, the URA said. The price index has fallen 8.0 percent from the previous peak of Q3 2013, noted Desmond Sim, Head, CBRE Research for Singapore & South East Asia. “This is not surprising as the market has grappled with a reduction in sales volume since the introduction of the Total Debt Servicing Ratio.”
Prices of non-landed private residential properties dived across all market segments.
In the Core Central Region (CCR), prices fell 1.3 percent, higher than the 0.6 percent decline in the quarter before.
The Rest of Central Region (RCR) saw prices drop 1.5 percent, more than the 0.6 percent dip in the second quarter, while prices in the Outside Central Region (OCR) fell 1.6 percent, compared to the previous 1.1 percent slide.
“The OCR saw the largest correction this quarter largely because of the contribution in sales from High Park Residences, which were launched at a palatable unit price and quantum,” Sim said.
As long as the property cooling measures are in place, CBRE Research expects price corrections to continue at a moderate pace, on the back of the current economic outlook and rising interest rates.
“Generally, the rate of descent has been gentle compared to the previous two corrections, which were impacted by global events. Should the price decline persist, it is likely that price levels will edge closer to the previous peak of 2008 pre-Global Financial Crisis,” added Sim.
URA’s flash estimates are compiled based on transaction prices provided in contracts submitted for stamp duty payment and survey data on new units sold by developers during the first 10 weeks of the quarter.
The agency will release the full statistics for the third quarter in the coming weeks, capturing more data from stamp duty records and the take-up of new projects.
Rising auction sales hint at a recovery
Singapore’s property auction market rebounded in the third quarter of 2015, with overall sales reaching $27.63 million – more than double the $9.99 million in the second quarter, but still below the $31.65 million achieved during the same period last year, revealed property consultancy JLL.
A total of 10 sales were closed during the quarter, up from five in Q2 and on par with the 10 deals recorded a year ago.
According to JLL, 70 percent of sales involved residential properties worth $13.62 million, up significantly from the previous quarter’s $6.83 million.
Among them was the sale of a four-bedroom apartment at The Imperial on 5 Jalan Rumbia for $3.44 million, which was 11 percent higher than its opening price of $3.10 million.
“Overall, the attendance at auctions has been encouraging, with most experiencing a full house. All of the 10 sales that JLL has seen in the last quarter have been successfully sold at first appearance, which is indeed a positive result,” said Mok Sze Sze, head of auction and sales at JLL.
Govt releases two sites for sale
Two residential sites at Alexandra View and Jalan Kandis were released for sale on 30 September under the Government Land Sales (GLS) Programme for the second half of 2015, revealed the Urban Redevelopment Authority (URA).
Both 99-year leasehold sites are expected to yield a total of 515 housing units.
Launched under the confirmed list, the residential with 1st storey commercial site at Alexandra View measures about 90,731 sq ft, with a maximum gross floor area (GFA) of 442,967 sq ft.
Strategically located next to Redhill MRT station, within an established residential estate, the future development will be close to Tiong Bahru Plaza, Queensway Shopping Centre and IKEA Alexandra. Crescent Girls’ School and Gan Eng Seng Primary and Secondary Schools are also in the vicinity.
Property developers are expected to submit expensive bids for the plum site. According to URA, the tender for the Alexandra View plot will close on 12 November 2015.
Meanwhile, the 75,851 sq ft plot at Jalan Kandis in Sembawang was made available on the reserve list and offers a GFA of 106,197 sq ft.
Situated on the waterfront facing the Johor Straits, the site is within proximity to Sun Plaza, Sembawang Park, and established schools such as Canberra Primary School and Wellington Primary School.
The site will be triggered for sale once a developer offers a minimum price which is
acceptable to the government.
Analysts upbeat on Thailand property
Although foreign investment in Thailand’s property market has declined due to the Bangkok bomb blast in August, CBRE Thailand noted that analysts and developers believe the sector is resilient, while the long-term outlook for the country is positive.
“The tragic blast at the Erawan (Shrine) has hurt the overall market sentiment a bit. We were quite worried in the week afterwards,” said James Pitchon, executive director of CBRE Thailand. “But the overall state of the economy is a far more important issue driving the performance of the property market rather than a single tragic event.”
Koh Keng-shing, chief executive of Landscope Christie’s International Real Estate, said Thailand-based Ananda pushed back its marketing campaign in Hong Kong to late September. But none of his clients with intentions of purchasing properties in Thailand had backed out of deals in late August because of the bombing.
Pitchon added that the Thai real estate market is more domestically driven as opposed to being exposed to foreign capital. The country’s luxury property sector, where prices are usually over USD300,000, are where the bulk of international purchases take place. CBRE stated that 20 percent of buyers purchasing a high-end condo in central Bangkok are foreign, with buyers from Hong Kong and Singapore leading the way.
Meanwhile, hotel and resort related developments may suffer in the aftermath of the bombing as tourist arrivals to Thailand fall. Resort locations away from Bangkok have been insulated from problems in the capital. These types of properties have been popular with foreigners in the past, but since the 2009 global financial crisis, demand for them has been somewhat slower, noted analysts.
CBD office rents down in Q3: DTZ
Average monthly gross rents in Singapore’s central business district fell 4.1 percent quarter-on-quarter to $10.40 psf in Q3 2015, marking its first decline since 2013, a DTZ report revealed.
The average monthly rents in Marina Bay dropped 5.5 percent quarter-on-quarter to $13.00 psf, while rents in Raffles Place slipped 3.4 percent quarter-on-quarter to $10.45 psf per month. The city fringe area, which includes Orchard Road, Anson Road and Beach Road, saw average rents fall 2.1 percent quarter-on-quarter to $8.25 psf per month.
DTZ attributed the fall in office rents to downside risks posed by the external economic environment.
“The subdued global growth and China’s economic slowdown contributed to a less optimistic outlook for Singapore, with the Ministry of Trade and Industry (MTI) narrowing the GDP growth forecast for 2015 to be between 2.0 and 2.5 percent in August 2015,” it said.
“These in turn led to a slowdown in leasing activities, which was mainly supported by lease renewals and take-up of smaller space.”
Meanwhile, office occupancy within the CBD dipped 0.9 percentage points quarter-on-quarter to 95 percent in Q3. Occupancy rates in Marina Bay and Shenton Way fell 1.1 percentage points and 1.8 percentage points to 94.1 percent and 94.3 percent respectively.
Raffles Place, on the other hand, saw occupancy rates increase to 96.7 percent in Q3, on the back of relatively healthy occupancy rates of newer developments like CapitaGreen.
Looking ahead, DTZ expects the large impending supply of office space to place greater downward pressure on rents in the CBD next year.
The city centre will see around 2.6 million sq ft of office space enter the market in 2016 and about 1.1 million sq ft from 2017 to 2018. We anticipate office rents in the CBD to trend downwards, especially if the current global economy remains uncertain. After 2018, rents may stabilise as the supply should be absorbed,” said Dr Lee Nai Jia, Regional Head (SEA) of Research at DTZ.
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