A volatile property market with increasing mortgagee sales
Jones Lang LaSalle (JLL) reported that home prices decreased 4.3 per cent year-on-year in Q3 2014, resulting in Singapore seeing the greatest drop in home prices across the Asia Pacific region. JLL also noted that home prices are expected to decline by two to six per cent leading up to end 2015. With the slowdown, foreign developer interest and participation has moderated as well. Data from JLL showed a decline in the percentage of foreign bidders for private residential Government Land Sales (GLS) sites, from 21.7 per cent in 2013 to 14.8 per cent in 2014. Malaysia developers, who flocked to Singapore when property prices were booming, are now cautious in launching new projects, particularly high-end projects. Local developers are continuing to set their sights overseas for the time being, including UOL Group CapitaLand.
Auction sales are on the rise as mortgagees are selling their properties at bank auction houses. Colliers International revealed a sharp increase in properties put up for auction sale in 2014, when 98 residential properties were put up by mortgagees from January to October 2014. Ms Grace Ng, Colliers International Deputy Managing Director, noted to the Singapore Business Review that “A total of 131 properties were put up for auction sale by mortgagee this year from January to October. This is more than five times the 25 properties put up by mortgagee in the same period last year. In the residential segment, 98 residential properties were put up by mortgagees in the period from January to October 2014. This is seven times the 14 residential properties put up in the same period last year.” Two luxury homes at the Turquoise, in Sentosa Cove, were put up on mortgagee sale due to borrowers defaulting on loans. The Credit Bureau revealed that 25 homeowners were unable to repay their mortgages within the first nine months of 2014 compared to 10 homeowners who defaulted on their loans in the same period last year.
While the market continues to look volatile, enbloc sales may provide alternatives to developers. Derby Court, a freehold site situated in District 11, has been put up for enbloc sale with submission for tenders closing on 20 January 2015. Ms Suzie Mok, Senior Director of Investment Sales at Savills Singapore, told Channel NewsAsia, “”Sites with absolute price quantum of less than S$70 million for a high-rise 36-storey development are few and far between. This is a sweet spot to boutique developers in the present market.”
Mr Chia Boon Kuah, President of the Real Estate Developers’ Association of Singapore (REDAS), said at the REDAS 55th anniversary dinner, that home vacancy rates are likely to approach ten per cent due to the increase in supply of 68,000 newly completed residential homes in the following few years. Developers have expressed concerns over the real estate industry, and have prompted the Government to implement “supportive measures” to prevent the market from worsening further.
Singapore remains an attractive destination for foreigners
According to the Urban Redevelopment Authority (URA), the leasing volume of private residential properties has seen a quarterly growth of 15.2 per cent to 17,775 cases. There have been a total of 46,632 leases within the first nine months of 2014, 8.7 per cent higher than last year’s 42,899 leases recorded over the same period. The Savills Residential Leasing Briefing for Q3 2014 attributed the increase in leasing activity to Singapore’s attractiveness as a city state to foreign nationals. According to an annual Hongkong and Shanghai Banking Corporation (HSBC) survey, Singapore was ranked the best place in Asia for expatriates to live in, and was the second best place in the world after Switzerland. Singapore’s good career progression, financial well-being and quality of life were reasons cited in the survey for expatriates who choose to work here.
HDB launch and enhancement to the Married Child Priority Scheme
The HDB announced on 25 November 2014 that 7,568 flats will be launched for sale in a mix of mature and non-mature towns under the November 2014 Build-to-Order (BTO) and Sale of Balance Flats (SBF) exercise. 4,277 BTO flats will be offered in Tampines, Sengkang, Sembawang and Yishun including the upcoming Tampines North district, while the 3,291 SBF units being offered are located in 11 non-mature and 15 mature towns. This launch would bring the total BTO flat supply in 2014 to 22,455 units, in line with HDB’s commitment to launch 22,400 units for sale this year. Including the sale of balance flats, HDB has offered a total of 29,129 flats for sale in 2014.
Property analysts anticipate strong interest in flats in Tampines, as GreenRidges will be the first housing project in Tampines North, as well as the first project in a mature town to offer Three-Generation (3Gen) flats. Mr Chris Koh, Director of Chris International said to Channel NewsAsia, “Tampines is a mature town. We have a regional centre there, near your banks, your shopping and your movie theatres, for example. If you have BTO flats in Tampines, which we have not seen for a very long time, for sure it will have high demand.” The next BTO launch will be happening in February 2015, with 3,940 flats being offered in Bukit Batok, Geylang and Hougang. HDB revealed that a total of 16,900 new flats will be offered in 2015, and four BTO exercises will be held.
HDB announced on 21 November that a proportion of new flat supplies would be set aside for parents and married children who wish to live close to each other. The enhanced Married Child Priority Scheme (MCPS) will set aside up to 30 per cent of the new flat supply for MCPS first-timer families, and up to 15 per cent for second-timer families. These changes will be implemented from November’s BTO and SBF exercises. First priority will be extended to two groups under the scheme: Parents and married children who apply to live under one roof, and parents who own flats in mature estates and apply for BTO flats near their married children in non-mature estates.