Week in Review – 26 February 2016

Local Property News 
Singapore tops Asia as safest city with highest quality of living
According to global human resources consulting firm Mercer, Singapore is Asia’s safest city, with the highest quality of living. Singapore is placed 26th globally and top in Asia when looking at the quality of living, while ranked top in Asia and eighth globally in terms of safety. 

More luxury homes auctioned amid stumbling economy
With the global economy full of uncertainty, Singapore saw more luxury homes put up for auction in 2015, according to DTZ data. 2015 saw 87 properties listed for mortgagee sale, close to double the 47 units listed for mortgagee sales in 2014. There was also a hike in the number of properties listed for owners’ sale, from 77 properties in 2014 to 135 properties in 2015.
Landed properties listed for auction likewise saw an increase, from 39 units in 2014 to 53 units in 2015. DTZ attributed the rise in auctions to homeowners having trouble financing their mortgages as a result of Singapore’s economic slowdown combined with the softening of the country’s leasing market. The DTZ report also stated that more prime homes will be auctioned in the near future, as investors are letting go of their property investments due to the weakening economies of China and Japan.

First project in almost three years launched in Orchard Road vicinity
CapitaLand recently launched integrated development Cairnhill Nine, a 268-unit residential tower. It is the first residential project launched in the Orchard Road vicinity in close to three years. According to an analyst, there is an underlying demand for residential property, but developers need to ensure prices are relatively low in order to attract buyers. Dr Lee Nai Jia, Head of Research for Singapore at DTZ, told Channel NewsAsia that while there is substantial buyer demand, buyers are “constrained by the TDSR (Total Debt Servicing Ratio) and ABSD”. An indicative average price of the Cairnhill Nine project is S$2,500 per square foot (psf), with prices ranging from S$1.35 million for a one-bedroom apartment, to S$6.67 million for a penthouse.
First BTO exercise of 2016 sees 4,170 units launched
The first Build-to-Order (BTO) exercise of Singapore’s Housing and Development Board (HDB) in 2016 saw 4,170 flats in Bukit Batok, Sengkang and Bidadari launched on 24 February. The mature estate of Bidadari saw 1,594 flats launched in Alkaff Oasis, while 1,655 and 921 flats were launched in West Plains @ Bukit Batok and Anchorvale Plains in Sengkang respectively. Flats ranged from S$85,000 for a two-room Flexi in Bukit Batok, as well as S$543,000 for a 3Gen flat in Bidadari. A Today report noted that there were more applicants for Sengkang and Bidadari flats as of 5pm on 24 February, as compared to Bukit Batok flats. The HDB expects to launch 18,000 units this year and about half will be in mature estates to meet homebuyer demand. HDB will hold the next BTO exercise in May offering approximately 4,070 flats in Ang Mo Kio, Bedok, Bukit Merah, Bukit Panjang and Sembawang. Concurrently, about 5,000 balance flats will be offered in a Sale of Balance Flats (SBF) exercise.

Singapore sees success at controlling housing affordability
The 12th Annual Demographia International Housing Affordability Survey notes that cooling measures on Singapore’s property market have succeeded in ensuring new homes in the country are comparatively affordable, however prices remain on the high side. Homes in Singapore are ranked “seriously unaffordable” in the survey, although the report indicated that the greater supply of public housing means new houses in Singapore are becoming more affordable.
In terms of controlling housing affordability, Singapore has seen more success compared to Hong Kong, considering Singapore’s home affordability multiple is five, whereas Hong Kong’s is 19.0, the most unaffordable in the report.
Global Property News

US resale market sees unexpected growth in January; home values increase
Despite slowing global economic growth and tighter financial market conditions, US home resales reached a six-month peak, an unexpected rise and sign that the economy is largely stable.
According to the National Association of Realtors (NAR), there was a 0.4 per cent increase in existing home sales, to an annual rate of 5.47 million units in January. This is the highest figure since July 2015 and second highest since 2007.  
A Bloomberg survey showed that the value of homes in 20 US cities has increased. The S&P/Case-Shiller index, based on a three-month average, showed an increase in gains from 2014 to 2015, led by Portland, Oregon, San Francisco and Denver. The lowest increase was recorded in Washington.

Time needed for Indonesia’s market stimulation to take effect
With the residential market performing poorly in Q4 2015, the Indonesia central bank, Bank Indonesia, triggered a reduction in benchmark rates for the second month straight, an attempt to stimulate growth. Bank Indonesia had reduced the benchmark rates for the property sector from 7.25 per cent to seven per cent. 
 In Q4 2015, Indonesia’s residential market recorded a mere 0.73 per cent quarterly increase, a dip from 0.99 in the preceding quarter. According to Eddy Ganefo, Chairman of the Association of Housing and Settlement Development in Indonesia (APERSI), despite government effort at stimulating growth, the effects might not be noticeable until H2 2016.

London, New York and Sydney – prized trophies for Asian investors
London, New York and Sydney have consistently attracted high-net-worth Asian property investors. These three metropolitan cities, with well-established reputations of being financial hubs and cultural centres, have been able to attract Asian investors even when returns have been lower. For some, owning a property in these cities is a symbol of status. For others, world-renowned education systems and universities are the reasons for the popularity of these cities. Even when property in these markets are becoming exorbitantly expensive, when competition from local buy-to-let investors make it difficult to find good, value buys, Asian investors continue searching for property. For Singaporeans in particular, property investment company IP Global noted that Australia, the United Kingdom and Japan are the top favourite destinations for purchasing overseas property.