Week in Review – 16 October 2014

Private home transactions improve as lower prices appear to meet expectations, Consecutive eight month decline in HDB Resale Prices, New launches Marina One Residences and Lake Life see varied responses, Iskandar continues to attract investors
Private home transactions improve as lower prices appear to meet expectations
The Urban Redevelopment Authority (URA) has revealed in its latest figures that the private housing market has regained momentum, following slow sales in August. According to URA, 648 units (excluding ECs) were sold in September, marking an improvement from August where 437 units were sold. Mr. Nicholas Mak, Executive Director for SLP International noted to TODAY that the recovery was not unexpected, and it does not imply that the market will continue to see increases. “The cooling measures, particularly the TDSR (Total Debt Servicing Ratio), will continue to pressure the market. The figures say it all – we haven’t seen transaction cross the 1,000-unit level so far this year, except in May,” said Mr. Mak. On the resale market, flash estimates by Singapore Real Estate Exchange (SRX) show that private residential resale prices have dropped by 0.3 per cent from August to September. The falling prices were driven by a 2.1 per cent decrease in prices in the Outside Central Region (OCR), whereas prices have increased in the Core Central Region (CCR) and Rest of Central Region (RCR) by 0.9 per cent and 2.9 per cent respectively. Resale transaction volumes have also improved, with 465 transacted non-landed private homes in September, a 15.3 per cent increase from August. In addition, the SRX price index marked a 14 per cent decline in private residential rental volume for September 2014, from 3,668 units to 3,171 non-landed private units. However, year-on-year, rental volumes for private homes have increased by 8.7 per cent in comparison to September 2013. Overall rental prices have fallen by 0.2 per cent from August to September. Rents fell by 0.6 per cent and 0.9 per cent respectively for units in RCR and OCR, whereas rents increased by 0.3 per cent in the CCR.
CBRE Research noted in its Q3 2014 Singapore Market View report that the median size of non-landed private residential homes has declined by 41.5 per cent since 2007, from 1,270 square foot (sq ft) to 753 square foot sq ft in Q1-Q3 2014. The median price per square foot (psf) for non-landed private properties has increased over the same period by 31.2 percent to S$1,275 psf. According to the report, a study of caveats lodged for non-landed new sales from 2007 to H1 2014 shows that 50 to 70 per cent of the new units sold were priced below S$1.25 million. The most appealing price band for private home buyers was between S$750,000 and S$1 million. CBRE has stated that developers are adapting to the changing market conditions by producing units of smaller formats, so as to meet the price threshold for financially constrained home buyers, remaining affordable yet profitable. It was also observed that 50 to 70 per cent of these buyers were HDB occupiers whom were either HDB upgraders, singles or new couples looking for new homes. CBRE expects smaller homes to continue being the preferred format for both developers and home buyers. 
Consecutive eight month decline in HDB Resale Prices
Housing Development Board (HDB) resale prices have been affected by property cooling measures, as well as by an increase in supply of Build-to-Order (BTO) flats. SRX reported that prices have fallen consecutively over eight months, decreasing by 0.5 per cent from August to September, and by a total of 4.6 per cent this year. Analysts who spoke to TODAY predict the total price decline for 2014 to be between five to eight per cent, and foresee a continual decline in resale prices with an incoming supply of BTO flats and Executive and Private Condominium projects nearing completion. However, September sales volume for HDB resale flats has improved by 10.7 percent from August, with 1,469 units sold.  
HDB rental volume and rental prices have also been affected by cooling measures. The SRX property index indicated that rental volumes have dropped by 6.7 per cent in comparison to August. A year-on-year comparison showed a 0.7 per cent decline since September 2013. Rental prices have decreased by 0.3 per cent since August, and by 2.5 per cent since September 2013. 
New launches Marina One Residences and Lake Life see varied responses
Marina One Residences received an overwhelming response during its preview phase, with 300 out of 372 units released sold. A majority of the transacted units were one and two-bedrooms, with prices ranging from S$1,960 per square foot (psf) to S$3,100 psf after early bird discounts. In comparison, the public launch for the property on 11 October 2014 encountered a lukewarm response, with only 20 units sold. Analysts noted that sales of the project were “commendable” for the current market conditions in the city area. Mr. Colin Tan, Director and Head of Research and Consultancy at Suntec Real Estate Consultants said to TODAY, “There’s no doubt that there’s a lot of liquidity in the market. It’s a matter of drawing it out and translating that into sales.” 70 per cent of buyers are Singaporeans, 20 per cent Malaysians, while the remaining consisted of Indonesian and Chinese investors. The developers continue to be cautious by releasing only one of its towers for sale.
Lake Life, a 546-unit executive condo (EC) located in Jurong, has received a record breaking number of e-applications on 12 October 2014. The EC was oversubscribed by three times, with 1,828 applicants. Lake Life was one of the final developments to evade the Resale Levy for Second-Timer Applicants, implemented last December. Speaking with TODAY, some analysts commented that they believe projects launched in the next 18 months, which are affected by the resale levy, will experience a soft market. Developers would need to offer attractive pricing to home buyers to remain competitive. However PropNex CEO Mr. Mohamed Ismail said to TODAY, “The demand for ECs will continue to be there despite cooling measures (as) they are priced 20 to 30 per cent lower than mass-market private condos.”
Iskandar continues to attract investors
Almost 80 per cent of the Aquaint Danga Residensi in Danga Bay, Iskandar, was sold at its launch last week. This was despite the project being priced approximately 30 per cent higher than similar high-end projects along Danga Bay waterfront, and an apparently softening property market in Iskandar, Malaysia. The luxury condominium is a development by Para Impiana Sdn Bhd, a joint venture between Rampai Fokus Sdn Bhd and two Singaporean developers – Imperial Marina Pte Ltd and Skyfront Holdings. The project consists of four tower blocks with a total of 818-units, as well as integrated shops, high-end dinning options, and is located near parks linked to an eight kilometre boardwalk along the Danga Bay waterfront.