Singapore’s cooling residential property market
Singapore’s housing market, the second-most expensive in Asia, posted the second worst start for home sales since 2009 due to tighter mortgage curbs. According to the Urban Redevelopment Authority (URA), the number of units sold by developers dropped 16 per cent month-on-month in January, down from 384 units to 322 units. Home prices experienced the longest losing streak in 17 years as prices dropped for the ninth consecutive quarter in Q4 2015. As a result, prices fell 3.7 per cent in 2015, close to the four per cent fall registered in 2014. This is also the first year-on-year decline in prices since 2008. The Outside Central Region (OCR) registered the most sales with 213 private homes sold, followed by the Rest of Central Region (RCR) at 153 transactions and the Core Central Region (CCR) with 18 transactions.
Market volatility – threat to residential property market
According to JLL, the greatest threat to the residential property market in 2016 lies in the heightened market volatility, which could cause prices to dive faster than expected.
Ong Teck Hui, National Director, Research & Consultancy at JLL, said a soft landing for private residential property is unlikely in 2016 as market volatility continues. According to Ong, the residential market and stock market are significantly correlated. During the previous global financial crisis, the stock market nosedived 62 per cent between October 2007 and March 2009. Around the same period, developers saw sales plunge 71 per cent between 2007 and 2008, from 14,811 units to 4,264 units.
Completion of Singapore’s first “luxury” hotel-inspired EC
CityLife@Tampines, Singapore’s first luxury hotel-inspired executive condominium (“EC”) project, has been awarded a Temporary Occupation Permit (“TOP”). The project was developed by Tampines EC Pte Ltd, a consortium comprising Amara Holdings Limited, Kay Lim Holdings Pte Ltd and SingHaiyi Group Ltd. The 514-unit development, first launched in November 2012, is Singapore’s first “luxury” hotel-inspired EC development. It sold 90 per cent of its 514 units within two days of its launch and was subsequently sold out by March 2013.
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Australian authorities’ attempt at controlling property prices largely ineffective
Overseas developers are likely to have taken advantage of a loophole in property rules in Australia, leading to record high investments in the country last year. To prevent price hikes, curbs were put in place to restrict foreigners from purchasing resale homes. Foreigners however are not restricted from purchasing newly built properties in Australia, driving opportunities for overseas investors to tap on one of the fastest growing markets worldwide. This has led to unaffordable homes and an influx of cash from wealthy Chinese, driving regulators to contemplate implementing stricter anti-money laundering rules.
According to Reuters, a review of the annual reports of the Foreign Investment Review Board found that residential ‘off the plan’ construction approvals financed by foreigners amounted to S$16.2 billion in 2014, triple that in 2013. Analysts believe the 2015 figure, set to be released in April, will be even greater than in 2014.
US rental growth increased 4.3 per cent year-on-year, highest since Q2 2008
According to leading international agency JLL’s Global Market Perspective for Q1 2016, the United States’ apartment sector saw rental growth reach a seven-year high, after increasing 4.3 per cent year-on-year, the greatest increase since Q2 2008.
While thirteen markets saw rental growth increase by more than five per cent year-on-year, JLL cautioned that there are underlying concerns. JLL said, from a leasing perspective, Boston and Washington DC are some markets to be wary of as “[while] these markets are experiencing the highest absorption rates at present in the US, they have simultaneously seen delivery levels outpace them”.
However, despite strong performance in the leasing sector, a report by the U.S. Department of Commerce says new-home construction in the US cooled in January unexpectedly. Housing starts dipped 3.8 per cent from 1.14 million in December to 1.1 million in January – a three-month low.