Week in Review – 16 December 2016

Local Property News
GCB price expected to continue sliding in H1 2017
The average price of Good Class Bungalows (GCBs) fell to S$1,352 psf in December 2016, from S$1,352 psf in 2015 and S$1,428 psf in 2014. Analysts expect GCB prices to continue falling in H1 2017 despite the increasing volume of GCB transactions. According to CBRE Research, 35 GCBs worth S$755 million have been transacted in the year-to-date, an increase in transaction volume and value compared to the 33 transactions worth S$715 million in 2015 and 28 transactions worth S$628 million in 2014.

Private residential prices expected to dip in 2017; unlikely to experience steep fall
According to OCBC Investment Research, home prices in Singapore are unlikely to experience a steep fall in 2017 as the housing market has ‘high price elasticity’ of demand – meaning that it is likely buyers will enter the property market whenever prices are low. OCBC Investment Research expects prices of private residential property to slide three to seven per cent in 2017, with residential rental prices dipping five to ten per cent during the same period. Although property prices have continued sliding in 2015 and 2016, the transaction rate of residential units seems to have stabilised at 1,800 to 2,000 units per quarter. Approximately 5,700 private residential units have been sold to date in 2016.  

Approximately S$83 million in aid provided to more than 4,300 families under Proximity Housing Grants 
Photo credits: HDB
More than 4,300 families have benefitted from the Housing Development Board’s (HDB) Proximity Housing Grants (PHG). Under the PHG, eligible families receive a S$20,000 grant to offset costs of purchasing a resale flat, while eligible singles who purchase a resale flat with their parents receive S$10,000. HDB has provided approximately S$83 million in aid under the PHG, introduced more than a year ago. The objective of PHG is to provide more housing options to Singaporeans, such as buying a resale flat with or near parents, or for parents to live close to their married children for mutual help and support. According to HDB, the PHG complements other housing schemes to help parents and married children stay closer to each other. Other similar schemes include the Married Child Priority Scheme and the Multi-Generation Priority Scheme. 

17,000 BTO flats to be launched in 2017; shorter wait times for couples
National Development Minister Lawrence Wong announced that 17,000 Build-To-Order (BTO) flats will be launched in 2017, a reduction in the supply compared to previous years. According to property experts, this reduction could result in either a glut or sufficiently meet demand, depending on location and type of flats launched. Minister Lawrence Wong said that the BTO units launched in 2017 will be spread across both mature and non-mature estates. The minister also announced that couples can expect shorter wait times for BTO units by 2018. The Housing and Development Board (HDB) will plan, prepare and start construction on BTOs before their official launch in a bid to reduce the wait times for couples to two to three years, from the current three to four years. 
Global Property News

Average Manhattan apartment price expected to cross US$2 million
The average price of a Manhattan apartment is expected to across US$2 million in 2016, almost a doubling in value over the past decade. Mortgage prices have been on the hike since the U.S. election as higher interest rates come with expectation of economic stimulus packages from President-elect Donald Trump. Real estate listings and data website for New York City, CityRealty, estimates that average co-op and condo price in Manhattan, excluding Harlem and nearby areas, is at its record of US$2.2 million in 2016, up from US$1.9 million in 2015. While Manhattan apartment prices have increased annually since 2011, they are expected to stagnate in 2017 due to a shortage of large and expensive new buildings in the new year. 
Manhattan to add 5,698 new apartments in 2017, landlords expected to provide more incentives
According to a report by appraiser Muller Samuel Inc and brokerage Douglas Elliman Real Estate, 25 per cent of new leases in November included incentives ranging from a month’s free rent or payment of broker fees; an 11 per cent year-on-year increase. Factoring in the value of these incentives, the median rent in Manhattan was US$3,264 per month, a decline of 1.6 per cent from last year. According to a separate report by Citi Habitats, the pressure on landlords will continue in 2017 with a further 5,698 market-rate apartments entering the rental market in Manhattan. 4,879 rental units were added in Manhattan this year. 

City of London sees slowest growth in home prices in UK
According to the Office for National Statistics’ (ONS) UK House Price Index (HPI), the annual growth in home prices in the country slipped 0.1 per cent to 6.9 per cent in October 2016. Home prices in London saw the biggest fall of 8.8 per cent year-on-year, to £713,000 on average. Within London, Kensington and Chelsea are the most expensive boroughs to live in, with houses priced at £1.2million on average, compared to Burnley which is the cheapest area in the UK, with a house priced at £75,000 on average. 
Analysts expect BOE to raise interest rates
Economists expect Bank of England (BOE) to raise interest rates as a result of a 15 per cent dip in value of the sterling since the Brexit vote, and the threat of inflation exceeding two per cent. This is in line with a November central bank survey, where 40 per cent of respondents expected interest rates to rise within a year. Sterling swap rates, used by banks to price mortgages, have been increasing since September and are currently at a peak since the Brexit vote in June. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that mortgage rates will likely increase over the next three months. 

Australian home prices experience slowest growth rate since 2013 
According to the Australian Bureau of Statistics (ABS), home prices grew 1.5 per cent quarter-on-quarter in Q3 2016, less than the 2.3 per cent forecasted by economists. Residential property prices grew at 3.5 per cent annually, down from 10.7 per cent annual growth in 2015. Prices of residential property in Sydney grew by 3.2 per cent year-on-year, compared to 20 per cent annual growth in 2015. One of the factors resulting in the slower price growth were the tighter rules on investment lending.