Week in Review – 2 April 2015

Private home prices and HDB resale prices dip in Q1, Yishun, Sembawang and Seletar: new hotspots of residential leasing market, URA adopts new method to calculate Property Price Index (PPI), Property cooling measures could be adjusted this year, SGD depreciation fears attributes to SIBOR spike, Increase in number of properties put up for mortgagee auction
Private home prices and HDB resale prices dip in Q1
Singapore private home prices declined 1.1 per cent quarter-on-quarter between January and March 2015. Prices of non-landed private homes declined the most in the rest of central region, at 1.8 per cent, followed by outside central region at 0.9 per cent. Prices in the core central region saw a 0.6 per cent decline. 
Prices of Housing and Development Board (HDB) flats showed a one per cent dip. The HDB Resale Price Index for the first quarter hit 135.6, down from 137.0 in the previous quarter. 
Yishun, Sembawang and Seletar: new hotspots of residential leasing market
Demand for outlying districts is rising, specifically in Yishun, Sembawang and Seletar. The areas have been popular among junior expatriate professionals who do not mind living outside the city district. Expatriates say Yishun and Sembawang may be situated away from the city, but remain convenient as the areas are connected to the Central Expressway. 
Seletar in District 28 is popular for having large housing areas and gardens, as well as enjoying close proximity to the Singapore American School and Seletar Airport, which offers aviation lessons and chartered flights. 
URA adopts new method to calculate Property Price Index (PPI)
Beginning with the first quarter of 2015, the Urban Redevelopment Authority (URA) is using a new method to compute its Property Price Index (PPI), which tracks the prices of private homes. 
More characteristics of the properties, such as the size and age of the unit and its proximity to MRT stations will be included to calculate price changes more accurately. The current index does not differentiate between a small unit and a large apartment, or between new and old houses. The current attributes that are already in use include tenure, general location and property type.
Property cooling measures could be adjusted this year
Property cooling measures could receive a review this year as home prices, interest rates, speculation and foreign buying have “started to move in its desired directions” and “provide leeway for a review of its measures,” noted Maybank Kim Eng analyst Mr Derrick Heng. 
The additional buyer’s stamp duty (ABSD) could be relaxed for foreigners, but possibly only for high-end homes so as to address resentment among locals about buying competition with foreigners. The ABSD could also be reduced for Singaporeans and permanent residents buying a second property to help soak up the current oversupply of mass-market homes.
The incoming supply of homes has hit an all-time high, with over 21,000 private residential homes slated for 2015. 
SGD depreciation fears attributes to SIBOR spike
Interbank rates have risen by 60 basis points to 1.0 per cent since late 2014, its highest level in over six years. UBS noted that fears of the Singapore dollar’s depreciation against the US dollar have attributed to this rise. 
However, the Monetary Authority of Singapore (MAS) have expressed that the SIBOR rise will keep property prices in check as it will increase mortgage interest rates and squeeze foreign banks that have over-leveraged during the time period of low interest rates.
Increase in number of properties put up for mortgagee auction
According to Colliers, 56 properties were put up for mortgagee auction this year, nearly double that of Q1 2014, which saw 22 properties being put up. Residential properties made up the majority of mortgagee listings at 82.1 per cent. 
Sales were higher than previous quarters. Ten properties, including eight residential properties and a row of adjoining shophouses were sold in Q1 2015. The total transaction value hit S$34.28 million, nearly double the S$17.9 million during the same quarter a year ago.
Five of the apartments sold were located in the central region, indicating the ongoing demand for centrally-located homes. Two of the five were located in District 3, namely Outram’s Pearl Bank and Kim Tian Road’s Twin Regency. The remaining three were units in The Grange at Grange Road, Ville Royale in River Valley and Estilo in Wilkie Road. 
“There are an increasing number of homes, particularly high-end properties, being transacted at 20-30 per cent below the peak prices in 2007/2008. Hence, we are seeing opportunistic buyers who are quick to take advantage of the drop in prices to snap up well-located apartments in the prime areas,” said Ms Grace Ng, Deputy Managing Director of Colliers International.
Homeowners attribute difficulties in disposing units in the secondary market to the ongoing cooling measures, rising interest rates, loan curbs and increasing supply of residential units. In addition, a decreasing number of tenants due to slow expatriate inflows have widened the number of choices in the market, creating challenges for landlords.