HDB Resale Price Index continues slump
The HDB Resale Price Index (RPI) stood at 135.0 in Q2 2015, a fall from 135.6 in the previous quarter – marking its eighth consecutive quarter of decline. Resale transaction volume increased from 4,135 to 5,286 in the last quarter, marking a 27.6 per cent increase quarter-on-quarter.
The number of resale applications also saw a jump, with applications for four-room flats leading with 2,120 applicants, and three-room flats trailing behind with 1,518 applicants. This was mirrored by the number of subletting transactions, which increased by 1.2 per cent, from 10,385 to 10,510.
Luxury developers have resorted to slashing prices in a bid to boost sales after previous months’ dismal performance. In June 2015, a 2,756 sq ft 3-bedroom unit in Reignwood Hamilton Scotts was sold for $8.5 million ($3,085 psf)—a sharp decrease compared to October 2014 when a similar unit fetched $12.75 million ($4,626 psf).
Developers of luxury condos are using a combination of schemes, such as a TOP discount, absorption of Additional Buyer’s Stamp Duty (ABSD) and furniture packages to attract buyers and clear unsold inventory of the completed projects. Other projects with such “star buys” include Marina Bay Suites that lowered prices for selected remaining units by another 25 per cent in addition to an existing discount, and Tomlinson Heights which has units selling at a TOP discount of 15 per cent.
Private home price declines expected to persist, in line with excess supply
Private home prices saw yet another drop in the second quarter. This marks the longest period of continuous price declines over the past decade. Analysts expect prices to remain depressed given the housing supply glut.
According to the Urban Redevelopment Authority (URA), private home prices decreased by 0.9 per cent from Q1 2015 to Q2 2015. Non-landed properties however, saw various rates of decrease in different regions. The Outside Central Region (OCR) saw a fall of 1.1 per cent. The Core Central Region (CCR) saw an accelerated fall from 0.4 per cent to 0.6 per cent.
However, the Rest of Central Region (RCR) saw a decelerated fall of 1.7 per cent to 0.4 per cent. The price weakness can be attributed to increased vacancy rates (7.2 per cent to 7.9 per cent) as completed homes add on to the number of vacant units.
2,200 EC units left unsold as of June; The Brownstone sees “high sales”
With upcoming launches adding to the executive condominium (EC) glut, the 2,200 unsold EC units as of June are the highest in almost a decade.
In an interview with Channel News Asia, Executive Director of Research and Consultancy at SLP International Property Consultants, Mr Nicholas Mak said, “During the heyday of the EC launch market that was in 2011 to 2013, the number of e-applications each EC project can sometimes achieve is double the number of units available. One of the reasons why the demand was strong was also because of rising HDB resale and condominium prices. When prices of the mass market condos are rising very rapidly, it begins to go out of reach of some HDB upgraders who will then turn to the EC market as an alternative. But right now, the prices of mass market condominiums are sliding and HDB resale prices are also fairly stagnant.”
The biggest EC project to date, Sol Acres, garnered 800 e-applications for its first 707 units. The Vales EC sold less than 20 per cent of its 517 units when it opened for booking more than a week ago. Compared to November 2014, more than 95 per cent of its units at Lake Life EC were sold in two days.
Orange Tee’s Senior Manager of Research and Consultancy Mr Wong Xian Yang attributed the poor response to the resale levy that has deterred second-time buyers who usually contribute to half the purchase of units at an EC development. The CEO of Century 21 Singapore, Mr Ku Swee Yong, said that a revision of the household income cap for ECs would increase demand however, families with household salaries of S$13,000 or S$14,000 are likely to take private properties into consideration as well.
The Brownstone EC enjoyed high sales, according to City Developments Limited (CDL), with 185 units sold at an average of S$810 per square foot and all five-bedroom penthouses snapped up. According to CDL, a majority of units were sold to first-time buyers. Prices started from S$596,000 for a two-bedroom unit, $695,200 for a three-bedroom unit, S$835,200 for a four-bedroom unit, and S$1.316million for a penthouse. Competitive prices, attractive recreational facilities (such as luxury pools, social gardens and a junior skating ring) and close proximity to the planned Canberra MRT station were cited as reasons for the high sales.
Choa Chu Kang EC site garners 11 bids
The recent exercise for a site in Choa Chu Kang Avenue 5 drew 11 bids, implying that developers continue to remain confident. The tender for the 99-year-leasehold site closed on 28 July. Since the tender for a site in Anchorvale Crescent in February last year attracted 12 bids, this has been the next highest number of bids for an EC site, according to property firm SLP International Property Consultants.
Top bidders were Qingjian Realty (Residential), Suntec Property Ventures and Bohai Investments (Sengkang) with a bid of S$156 million, or S$295 per square foot per plot ratio (psf ppr). Following behind them was TID Residential with a bid of S$275 psf ppr.
A market watcher said bid prices were considered low, remaining below S$300 psf, in spite of the increased number of bids. ERA Realty Key Executive Officer Mr Eugene Lim attributed this to the location of the site being less attractive than other EC sites – Wandervale and Sol Acres – that sold at S$361 psf and S$357 psf respectively. In an interview with Channel News Asia, Mr Lim said “Given the much lower land bid price, the new development could well be designed with affordability in mind, possibly with a selling price of below S$800 psf”.
NUS-REDAS poll: Real estate market sentiment still weak
The sentiment index for Singapore’s property market was at 3.9 in Q2 2015, 0.1 higher from the previous three months. This was according to a survey by the Real Estate Developers’ Association of Singapore (REDAS) and the National University of Singapore (NUS), which polled 64 industry players. A score under five implies declining market conditions, while a score above five implies healthier conditions.
The worst performing sectors were residential and prime retail, while the best performing sector was the business park/hi-tech space. A Future Sentiment Index, which assesses the sentiment for the next six months, increased from 3.7 to 4.0. The poll revealed that developers are likely to continue with residential launches. About 52.4 per cent expect a dip in residential property prices in the next six months, while almost 75 per cent expect new launches to increase reasonably and/or maintain current levels in the next six months.
The latest modern luxury condominium project, The Emerald Ao Nang Condominium, located in Ao Nang, Krabi, was recently unveiled. In an interview with Property Report, Mr Sait Ketroj, Managing Director of developer Emerald Development Group, said that Ao Nang is a new opportunity for expanding the market, as it is the next famous tourist destination in Thailand after Phuket.
“According to market research, the supply in the condominium sector has not yet met the demand of customers. Therefore, the Emerald Ao Nang Condominium is the best choice both for customers who visit Krabi on vacation, as well as those with an interest in investing,” he added. The Emerald Ao Nang is situated among tourist draws and local and international businesses, promising an accessible and centralised residence. With three buildings and 205 units in total, the project will start construction in September 2015 and will complete in 2017.
Jakarta’s property revisions set to boost foreign demand for Indonesian property
Renowned for its surfing and rice-paddy landscapes, Bali saw a 15 per cent increase in prices of prime residences in 2014. Prices are set to continue increasing, as the Indonesian government looks at amending foreign property ownership rules on property, encouraging foreign demand from Asia.