Week in Review – 18 March 2016

Local Property News 
Property cooling measures in Singapore – to stay or go?
In hopes that property prices will rebound after cooling measures have been relaxed developers have been requesting for the government to relook at cooling measures. However, it might be too early to ease property cooling measures. According to Citi analysts, property prices in past cycles fell by over 10% before cooling measures were alleviated. With prices having dropped only 8.4 per cent as of Q4 2015 since the 2013 peak, there seems to be more room for price moderation in the property market.
Despite expecting a market rebound, analysts warn that property prices might continue decreasing due to weak demand. Slow economic growth, high household debt and increasing retrenchments have deterred buyers. According to a report by DTZ, there has been an 85% increase in properties put up for mortgagee sales in 2015, up from 47 properties in 2014, to 87 properties. This trend might be even more striking in the private property market as recent Housing and Development Board (HDB) measures appear to have reduced demand. Apart from revising the income ceiling for HDB housing grants up from $10,000 to $12,000 per month, HDB will also seek to provide greater flexibility in helping buyers with their third HDB housing loan.

Private property market records poor sales figures in February, expected to pick up in March
February saw the smallest number of units sold by developers in 14 months despite more units launched. According to the Urban Redevelopment Authority (URA), 301 units were sold in February 2016, a 6.8 per cent decrease compared to the 323 transactions in January. Year-on-year, February 2016 saw sales drop 22.8 per cent, down from 390 in February 2015.
Analysts expect numbers to pick up in March 2016, considering a number of project launches this month – including Cairnhill Nine and The Wisteria – have seen good sales figures. The Wisteria, launched last weekend, has sold 85 per cent of its 138 units. Similarly, Cairnhill Nine sold approximately 70 per cent of its 200 units.
Global Property News 
Rising demand for Filipino property 
According to Lamudi, a specialist on emerging property markets, greater internet penetration in Philippines has resulted in a rise in online property searches and queries. This has allowed the country to rise through the ranks and emerge as the 13th most popular country on TheMoveChannel.com, a global property website.  The country’s economic boom has also contributed to positive investor interest in the property market and consequently, greater demand for Filipino property. Boracay is an investment hotspot with the new airport slated to be completed this year, as well as launches of major property developments. 

Singapore-based property firm set its sights on Bruneian investors 
SLP International revealed plans to increase its activity in Brunei due to the positive long-term prospects of the market. Brunei is seen as a long-term market because of the number of wealthy clients experienced in overseas property investment. Interest in overseas investment is strong due to the strong Brunei dollar, and the firm believes that there is still a significant number of wealthy clients who are open to investing in overseas property. 

More affordable homes in London 
To cope with the demands of a growing population, Boris Johnson, Mayor of London, has announced plans to increase housing supply, stimulate building and construct affordable homes in London. He is aiming to deliver 100,000 affordable homes before his term ends. This involves creating 11 new housing zones with more than 25,000 news homes across London, stretching from Havering to Kingston and Enfield, bringing the total number of housing zones planned in London to 31, and 77,000 new homes. 
Of the 77,000 new homes, 34 per cent will be affordable, with regeneration of main town centres, train station hubs and housing estates.

Strong passive income for property owners; luxury apartment market in New York slows
According to Bloomberg data, Palm Beach, Florida; Montecito, California; Indian River Shores, Florida; and Los Altos Hills, California are the top five cities in the United States where the rich need to do the least to grow their wealth.
69 per cent of households in Atherton, California earn some form of “passive income” – income requiring minimal effort including dividends and rental payments. These Atherton households bring in approximately US$177,773 per annum. 
While these areas are seeing strong performance in the property market, New York’s high-end residential market is slowing down. Sales volumes of high-end residences in New York decreased from 55 transactions two years ago to 47 in 2015 and industry watchers think the number might drop further in 2016. City officials say the slowing high-end residential market might be beneficial for the city, as land prices have deterred the construction of new rental apartments and offices, while also pricing out small businesses. Furthermore, 30 per cent of those who are renting apartments are devoting more than half their income to pay for housing and utilities.

Demand for low-end properties outweighing supply
In the United States, with job growth being steady, mortgage rates low and apartment rents setting record highs, millennials are shifting their focus to homeownership, if they can find a house. 
A persistent lack of lower-priced houses has led to demand outweighing supply, causing millennials to face an affordability crunch. Where inventory is stocking up for the higher-end market, buyers looking to purchase lower-end houses are facing the exact opposite. The shortage is most pressing for starter homes. For properties valued at US$250,000 and below, inventory was lower by 8.2 per cent in January 2016 compared to January 2015, according to thae National Association of Realtors.