Week in Review – 23 December 2016

Local Property News
iProperty Agent Survey 2016 reveals highest interest in condominiums
According to iProperty’s Agent Survey 2016, condominiums garnered the highest level of interest from buyers, with 58.9 per cent indicating so; Housing Development Board (HDB) flats were a close second (49.2 per cent). 34.9 per cent of the surveyed property agents stated the average buyer budget as S$1 million to S$3 million between mid-2015 and September 2016. 26.9 per cent indicated an average buyer budget between S$500,001 and S$800,000. The average asking price was S$1 million to S$3 million, indicated by 38.4 per cent, and S$800,001 to S$1 million as noted by 22.7 per cent.

Analysts believe reduction of BTO supply to spur resale transactions
Photo credits: HDB
The Housing Development Board (HDB) will reduce the supply of Build-To-Order (BTO) flats to approximately 17,000 in 2017, down from 17,891 units in 2016. Analysts believe the reduction might lead to more resale transactions. According to Eugene Lim at ERA Realty, potential homebuyers might opt for resale flats assuming a diminished success rate of balloting for a BTO flat as a result of a reduced supply as well as stable prices and shorter waiting time for resale flats. Eugene Lim added price and waiting time are major factors influencing new flat buyers’ purchase decision. 

Singapore ranks 11th most expensive location globally for expatriates 
The latest ECA International Cost of Living survey has ranked Singapore as the 16th most expensive country globally for expatriates, up from 33rd position in 2011. Cost of living for expatriates in Singapore is higher due to the Singapore dollar rising against other major currencies. According to Lee Quane, ECA International Director for Asia, a strong Singapore dollar means that companies will likely have to increase the allowances for international employees in Singapore, to ensure their purchasing power is not affected by currency changes.

Government increases supply of land under GLS amid strong demand from developers
The government has increased the supply of land to be sold for private housing development in H1 2017, a move that property analysts believe is triggered by strong participation by developers in recent site tenders. According to the Ministry of National Development (MND), five private residential sites, allowing a yield of about 2,330 homes, will be made available for tender under the Government Land Sales (GLS) programme in H1 2017. This is a 7.4 per cent increase from units on the Confirmed List in H2 2016. On top of the five Confirmed List sites for H12017, which will be put up for tender regardless of market interest, a further 10 sites will be placed under the Reserve List to be put up for sale when there is sufficient interest, such as a developer making an opening offer acceptable to the government. The Reserve List sites can yield up to 5,135 residential units, less than the 5,375 units yield from the 2016 Reserve List. Analysts believe that 2017 Confirmed List sites at Woodleigh Lane and Lorong 1 Realty Park, as well as Reserved List sites at Jiak Kim Street and Fourth Avenue will draw the most interest from developers.
Global Property News

Signing of RTS agreement expected to increase interest in Johor Bahru property market
Interest in the Johor Bahru property market is expected to pick up in anticipation of the signing of a bilateral agreement between Singapore and Malaysia for the Rapid Transit System (RTS) in 2017. The RTS will link Thomson-East Coast Line’s Woodlands North station with Bukit Chagar in Johor. Singaporean and Malaysian officials have not set a timeline for the commencement of the RTS. According to analysts, major economic activity is needed to stimulate Johor’s property market, especially in areas around where transport links to Singapore have improved. Chris Koh, Director of estate agency Chris International, added that investors need to conduct due diligence checks such as reputation of developers and property laws of Malaysia before investing.

British Columbia government offers loans to aid first-time home buyers 
The British Columbia government is stepping in to assist first-time home buyers to purchase a home, by offering down payment loans, as home buyers struggle with hefty house prices. According to Christy Clark, British Columbia Premier, the government will implement a programme on 16 January 2017 to provide loans of up to C$37,500, or five per cent of the purchase value. The price of an average single-family home in Vancouver has risen to C$1.5 million. Despite home prices being subdued after authorities implemented a 15 per cent tax on foreign buyers back in August 2016 and tighter mortgage rules since October, prices remain at approximately 20 times the median household income. 25-year interest-free loans, with repayment commencing after five years, will be available under the first-time buyer programme.
Rents in London fall for first time since 2010; expected to rise in 2017
Residential rents in London, the priciest in the world, have dipped in 2016 for the first time since 2010. According to property-market lender Landbay, private rents in London declined by 0.3 per cent between January and November 2016. Rents climbed 1.9 per cent across other areas in Britain during the same period. John Goodall, Chief Executive of Landbay, expects rents in London to rise in 2017 as banks tighten control on lending to landlords, which will probably impede the supply of rental homes in the market. However, growth of rents in London is likely to be lower than Britain’s country average. London’s residential property market has been popular among foreign investors, and property value does not seem to have fallen much since Britain’s decision to leave the European Union (EU).

Sydney and Melbourne housing markets show signs of cooling amid oversupply
Australia’s housing market is experiencing a slowdown, with the Sydney house price index rising 3.2 per cent in the year to September, down from two consecutive years of double-digit growth; the slowest rate of growth since 2012. Prices in Melbourne have risen by 6.9 per cent in the year to September, the slowest rate of growth in more than 12 months. The cooling of the housing markets in Sydney and Melbourne was due to increased warnings by the central bank on the looming oversupply of inner-city apartments, with Morgan Stanley analysts indicating a surplus of 100,000 residential units by 2018. 

New York’s luxury residential property market displaying signs of slowing down
New York’s residential property market is showing signs of slowing down. Developers Kevin Maloney and Kamran Hakim have sold the site where they planned to construct the city’s tallest tower outside Manhattan, despite spending three years purchasing the site for the US$750 million skyscraper. The developers had to abandon their project as Mr Maloney admitted they lacked the resources to complete the tower. According to Ross Moskowitz, real estate agent at Stroock & Stroock & Lavan, the New York real estate market has been unstable due to uncertainty arising from the result of the presidential election. Mr Maloney said that it is undeniable that the luxury residential property market has slowed, but the upside is that land prices should start dipping.