Local Property News
Weak sentiments in Singapore’s prime residential market
According to a recent JLL report, sentiment for Singapore’s prime residential market is exceptionally weak as seen from resale transactions, which have fallen to 800 per year in 2014/2015. This is comparable to figures registered during past recessions in 1998, 2001 and 2008.
However, JLL noted that the Monetary Authority of Singapore (MAS) stated in its Financial Stability Review in November 2015 that residential prices in Singapore could have been 17 per cent higher if not for the property cooling measures introduced since 2010. Measures such as the lower loan-to-value limits, additional stamp duties, as well as the total debt servicing ratio (TDSR) have been effective in preventing property prices from rising out of hand.
PropNex: Tweaks to property cooling measures needed, especially ABSD
Real estate agency PropNex raised the need to tweak property cooling measures in place at its annual convention on 9 March, with particular focus on the Additional Buyer’s Stamp Duty (ABSD). PropNex Chief Executive Ismail Gafoor stated that in attempting to achieve a stable and sustainable property market, it is better to have a pre-emptive adjustment of measures as opposed to apply post-corrective actions.
PropNex proposed for a removal of the seven per cent ABSD for Singaporeans purchasing their second property, and a reduction of ABSD from ten per cent to five per cent for third and subsequent purchases. For Permanent Residents, the suggestion was to remove the five per cent ABSD for their first purchase, and a reduction from ten per cent to five per cent for their second property while retaining the ten per cent ABSD for subsequent purchases. PropNex also proposed reducing the ABSD for foreigners purchasing homes above S$3 million, ten per cent for second buys.
Minister for Social and Family Development Tan Chuan-Jin responded in a dialogue session at the event that the government is open to tweaking the cooling measures if circumstances change.
Singapore registers high home ownership rates
According to the General Household Survey 2015 released on 9 March by the Singapore Department of Statistics, homeownership among resident households has increased from 87.2 per cent in 2010 to 90.8 per cent in 2015. Four-room flats remain the most common house type in Singapore with nearly one in three resident households living in four-room flats. However, the survey noted that there has been an increase in households living in condominiums and other apartments, from 11.5 per cent in 2010 to 13.9 per cent in 2015.
Global Property News
Changes to the property market in UK spark temporary increase in activity
Bank of England Deputy Governor Jon Cunliffe recently noted increasing risks in the housing market in UK even as they remain lesser than that in 2014. In addition, he mentioned that the fast-growing “buy-to-let” rental property sector was a potential risk to financial stability. Despite the rising risks, most property professionals have a positive outlook for the UK property market in the next 12 month, with 88 per cent of British Property Federation (BPF) members expressing confidence in the market. However, merely 54 per cent of the respondents expressed confidence in the property sector in the next five years. Ms Melanie Leech, Chief Executive of the British Property Federation, said to OPP Today, “Wider economic circumstances and political uncertainty are outside of our control, but there are a number of things the Government can do to ensure that the outlook remains bright. The next London Mayor has a clear mandate from the industry to sell public sector land if they really want to boost development early on in their tenure.”
US property market sees worrying trend of home flipping
A RealtyTrac report found that home flipping has increased in popular housing markets in the United States, a trend prompting concerns that a housing market bubble might be developing. There has been an increase in home flippers, while the number of home flips per individual investor has fallen. In 2015, 179,778 homes were flipped, the highest since 2007.
According to Mr Matthew Gardner Chief Economist at Windermere Real Estate, increase in the numbers of home flipping is usually a worrying indicator for the housing market.
Home flipping is defined as any transaction that occurred on the same property twice within 12 months.
Investments in Perth likely to be worthwhile in the longer term
CoreLogic, Managing Director at CBRE in Perth, Lloyd Jenkins believes Perth has a lot of opportunities to offer property investors even as it performed the worst among Australia’s capital cities and housing values fell 3.7 per cent in 2015.
Compared to the record prices of property in Australia’s east coast, property in Perth is relatively cheap now. Jenkins says this is a good deal for cashed-up Chinese investors who have invested in over-inflated property in Sydney and Melbourne.
CoreLogic noted that in October last year, values of dwellings in Perth dipped to the lowest since June 2013. Rents have also dropped nine per cent in the past 12 months while registering the worst vacancy rates across Australia, according to Reiwa, the real estate institute of Western Australia. In spite of the generally poor figures, returns for investors in Perth are relatively higher compared to that of Sydney and Melbourne. CoreLogic data shows that the rental yield in Perth was 3.8 per cent in January as opposed to 3.4 per cent and three per cent in Sydney and Melbourne respectively.
Furthermore, according to an index compiled by CoreLogic and Moody’s Analytics, prices in Perth are expected to increase by 5.08 per cent next year after having declined for two years.