City Developments urges government to review cooling measures
In light of home prices in Singapore dropping for the eighth-consecutive quarter, property developer City Developments (CDL) has called on the government to review cooling measures as soon as possible. In a CDL earnings statement in mid-November, the developer said that demand for residential units, in particular high-end residential units, stayed tepid, with sales hit by government cooling measures, rising interest rates as well as local and global economic uncertainty.
Private home sales picked up in October, but still lower than last year
With cooling measures in place, coupled with increasing rate hike jitters, locally-listed property developers continue suffering from poor domestic residential sales in Q3 2015.
While data by the Urban Redevelopment Authority (URA) show a 60.1 per cent leap in private property sales – from 341 units sold in September to 546 units in October – October’s figure is a 30.4 per cent dip compared to October 2014. URA data also show that 434 units were released into the market by developers in October, an eleven per cent rise from September’s figure of 391 units. Year-on-year, units launched dropped 35.8 per cent.
Despite the poor property market performance, cooling measures are not expected to be relaxed soon.
Condo and HDB rental volumes and rents fall
Condo rentals registered a 0.4 per cent dip in October, with residential rents in the Core Central Region (CCR) and Outside Central Region (OCR) dropping 0.8 per cent. The only rise in condo rentals was seen in the rest of Central region (0.4 per cent).
Data from SRX Property shows that year-on-year condo rentals are now 5.7 per cent lower than in 2014, and when compared to the peak in January 2013, is down by 13.7 per cent. Rental volume in October 2015 was 3,448 units, a 2.7 decrease compared to 3,542 units in September. Compared to October 2014, rental volume in October 2015 increased by 9.4 per cent from 3,153 units.
HDB rents also dipped compared to September, with three- and four-room flats seeing rents decrease by 0.5 per cent and 1.2 per cent respectively; five-room and executive room flats saw 0.1 per cent and 1.1 per cent rise in rentals. HDB rental rates have dipped 3.3 per cent year-on-year, with rental volumes decreasing three per cent to 1,602 units in October. Year-on-year, October 2015’s rental volume dropped 7.8 per cent compared to October 2014.
On Tuesday 17th November, the Housing Development Board (HDB) launched 12,411 flats for sale, the biggest sales exercise in Singapore’s history. Through the launch of these build-to-order and balance flats (units unsold in previous exercises), HDB will meet its target of introducing 15,000 units for 2015.
Three projects in the new Bidadari estate of approximately 2,140 flats, will be launched for sale in this Build-To-Order (BTO) exercise. Flats range from two-room flats under the Flexi scheme, to five-room flats. HDB announced these flats will be completed from 3Q 2019 onwards. Bidadari is located in Singapore’s central region, and will be developed as part of Toa Payoh town, spanning 93 hectares of land.
Just a day after the BTO launch (18th November), five-room units at Bidadari are already oversubscribed by more than six times, with 948 applications for 151 five-room flats available. 1,229 four-room flats are available for sale, and 2,766 applications have been submitted. Demand for three-room flats is comparatively weaker, with 183 applications for 567 units for sale. Generally, demand for Bidadari flats is strong despite being pricier than BTO units in non-mature estates.
Apart from its prime central region location, features making this new housing estate attractive to buyers include being situated near to two MRT stations (Potong Pasir and Woodleigh), a ten-hectare Bidadari Park with a greenbelt passing through the estate from Bartley Road to Upper Serangoon Road, as well as social and commercial facilities together with pedestrian and cycling networks.
High-priced ECs seeing lackluster demand, but luxury home market seeing a rise in sales
High unit costs, in spite of an expected increase in launches, has led to weak demand for Executive Condominiums (ECs).
According to analysts, selling prices of around $800 psf, in less-than-positive market conditions, has resulted in lower interests by buyers. In October, EC projects Sol Acres, The Brownstone, Signature at Yishun and The Terrace sold for between $779 to $820 psf.
On the other hand, Singapore’s luxury home market seems to be on the rise. Overall, October saw a 25 per cent month-on-month increase in sales, with the Core Central Region seeing 25 units sold.
London’s property market has cooled, with expensive homes and apartments in England’s capital losing value, a result of stamp duty sales tax put in place by the government and a stronger pound putting off foreign buyers. Across Central London, sales volumes of homes dipped 14 per cent during Q3 2015, with an average listing price 8.5 per cent lower than their original listing.
On the other hand, price growth of homes in Cambridge is the country’s highest. Hometrack, the UK’s latest Cities House Price Index, shows house prices in Cambridge increased 11.2 per cent between August 2014 and August 2015, compared to ten per cent in London and 6.3 per cent across England. The city’s strong economic growth and its thriving business and start up scene attracted the attention of domestic and foreign property investors, who are looking for more affordable housing.
Australia enforces foreign ownership laws; currency expected to dip
Seven residential properties that have been bought in breach of foreign ownership laws have been ordered by the Australian government to be put up for sale due to concerns of offshore buyers pushing up house prices. This raises the total number of homes declared as illegally bought by foreigners to 19. Residential property prices in Sydney are among the most overpriced globally, and the federal government announced in March 2015 new and expanded punishments for foreigners violating existing rules that allow them to purchase only new residential dwellings.
Treasurer Scott Morrison expects more divestments to be announced in the future, and warned foreign investors in residential property to abide by Australian law. He also reaffirmed the government’s commitment to enforce foreign investment rules.
Economists forecast a slowdown or contraction of Australia’s house price growth, with banks hiking lending rates in a bid to raise cash reserves under new tough capital buffering rules. Analysts also expect the Australian dollar to fall in Q4 2015. Since September 2015, with Australia’s central bank signaling benchmark interest rates will not be cut beyond a record-low 2 per cent, the Aussie dollar has risen against all its Group-of-10 peers. However, with the Reserve Bank of Australia not ruling out further easing if necessary for an economy adversely affected by China’s poor economic performance, and with the Federal Reserve preparing to raise its interest rates, strategists expect the Aussie dollar to fall to levels not seen since 2009. The Commonwealth Bank of Australia, the country’s largest lender according to market value, predicts the Aussie dollar falling from 71 US cents on 18th November to 65 US cents in H1 2016. A six-year low was registered in September, at 68.96 cents.
According to a joint survey of Real Estate Developers’ Association of Singapore and the National University of Singapore’s Department of Real Estate, weak sentiments in Singapore has led to more Singapore property developers targeting overseas markets, including Thailand.
Due to the seven rounds of government cooling measures introduced between 2010 and 2013, Singapore’s property market has been experiencing lower sales and prices. With fewer development opportunities and decreased revenue, Singapore-based developers have started looking at overseas markets for alternative real estate investment opportunities, typically mature and transparent markets with strong legal and regulatory frameworks such as Australia, the U.K., the U.S., Hong Kong and China.