Week in Review – 13 November 2014

The latest Singapore Real Estate Exchange (SRX) Price Index revealed a slight increase of 0.1 per cent in resale prices of Housing Development Board (HDB) flats in October. From September to October prices of four-room units remained constant whereas three- and five-room flats fell by 0.4 per cent and 0.1 per cent respectively. Analysts noted to TODAY that the month-on-month increase is most likely a one-time occurrence, driven by a 0.8 per cent increase in executive condominium (EC) prices.

Nevertheless, the increase in prices has attracted more homebuyers, and HDB resale volumes in October increased by 5.7 per cent to 1,553 units from 1,469 units sold last month. Analysts further noted to TODAY that prices are expected to stabilise in early 2015. Mr Chris Koh, Director of Chris International, expects lower activity in the next two months due to the school holidays and upcoming festivities.

Resale prices of non-landed private homes have also increased by 0.4 per cent in October, following a 0.6 per cent decline in the month before. However, prices still lag behind by 4.5 per cent in comparison with the same period last year. The increase in resale prices were driven by a 0.6 per cent increase in both the Rest of Central Region (RCR) and the Outside Central Region (OCR). In addition, resale volumes of non-landed private homes declined by 2.2 per cent to approximately 451 units from September – of which about 232 units are situated in the OCR. Mr Nicholas Mak, Executive Director of SLP International Property Consultants stated to TODAY that, “This is not the start of a price recovery … there is no change in the market fundamentals … The cooling measures and Total Debt Servicing Ratio (TDSR) framework are still in place, and the government has mentioned that it would not remove these curbs any time soon”. Mr Mak expects private property prices to continue to decline, although indicating that the decline might slow down.

Rents of non-landed private properties have fallen by 0.9 per cent in October, the lowest in about four years. The decline was attributed to supply of properties offered for rent outpacing the growth in tenants. The report showed that rental properties in the OCR saw the biggest decline by 1.5 per cent month-on-month, while the RCR and Core Central Region (CCR) saw a decline of 1.1 per cent and 0.7 per cent respectively. With more private properties approaching completion, analysts expect rents to continue to decline in the next few months. Mr Eugene Lim, Key Executive Officer of property agency ERA, commented to TODAY, “The continued drop in rents is expected as it is currently a tenants’ market. Tenants have strong bargaining power as the current supply glut and declining expat demand are pushing down rents.”

The latest Knight Frank Prime Global Cities Index report revealed that the overall price index for luxury properties in the world’s leading cities increased by four per cent since September 2013. Singapore was the worst performer amongst 33 key global cities with luxury property prices in the country registering the biggest drop by ten per cent. The price fall was attributed to cooling measures such as loan curbs. According to the Urban Redevelopment Authority (URA), the landed property price index for Q3 2014 fell by 5.1 per cent in comparison to Q3 2013. The landed property market in Singapore saw a larger decrease in price index then the non-landed property market – for which the price index fell by 3.3 per cent.

TRE Residences in Geylang will be launched this weekend, with an average indicative price of S$1,560 per square foot (psf). The developers of the 250-unit condominium will be offering early-bird discounts of up to five per cent at its launch. Additionally, two new executive condominiums (EC) will be launched in November – Bellewaters and The Terrace. Bellewaters located in Sengkang, and The Terrace located near Punggol Waterway, will open for bookings on 14 November. Prices for Bellewaters will start from S$744 per square foot (psf) and prices for The Terrace are expected to be sold at above S$780 psf. According to Square Foot Research, “The launch of these new ECs may result in renewed interest in older EC projects that were launched earlier if prices remain at a discount to surrounding private residential projects, which is likely the case. With tighter lending rules, consumers are inclined to be more finicky in their purchases and may opt for units that provides better value for their money.”

The most recent EC launch – Lake Life – has seen keen interest from consumers. The EC which opened for booking on 8 November saw 98 per cent – 521 out of 546 units snapped up. The project’s developers said that the “overwhelming response” is likely attributed to the ECs attractive location at Jurong Lake District, as well as the government’s intentions to further develop Jurong. Channel NewsAsia spoke with two buyers, and revealed that price was also a key criterion. The average price of the development was S$857 per square foot (psf). Nilesh Jadha, a buyer who owns an existing five-room HDB flat, said to Channel NewsAsia, “In terms of the price per square foot, I think this was quite attractive compared to the private developments – I think about 25 to 30 per cent less compared to the other private developments that we saw.”

With the construction of the Upper Thomson Mass Rapid Transport (MRT) station, residents and shop owners alongside Upper Thomson Road are preparing themselves for noise as well as inconvenience in 2015. The Land Transport Authority (LTA) announced that construction would most likely start in Q1 2015. The station will be situated beneath Upper Thomson Road between Thomson Plaza and the Church of the Holy Spirit, and road diversions are expected to be implemented in Q1 2015 to facilitate the construction.

In addition, adjustments to the traffic alignment will occur in Q3 2015, with final road adjustments beginning in Q2 2016. LTA plans to ensure inconvenience is minimised. Tan Kok Jin, Thomson Line Director of the LTA said to Channel NewsAsia, “We will put up noise barriers to block the noise from the machines and schedule the noisy work in the day time. But there are diaphragm walls work that has to be continued for 24-hours for safety reasons. If not the ground may collapse and cause more problems for the construction.” Variable Message Signs are currently put up to caution motorists of the road diversions and will continue to be in place until April 2018. The Thomson MRT station is anticipated to be completed in May 2020.