RPI flash estimates reveal 0.4 per cent decline in HDB prices
Flash estimates of the Resale Price Index (RPI) revealed a 0.4 per cent drop in Housing Development Board (HDB) prices for the second quarter of 2015. This marks the eight straight quarter of weakening prices. Full RPI statistics for the second quarter will be disclosed on 24 July, together with more accurate public housing data.
In response to the moderating HDB resale market, Build-to-Order (BTO) flats will be tampered down to 15,000 this year while an extra of 9,000 flats will be provided under the Sale of Balance Flats (SBF) scheme. In the first half of 2015, 8,039 flats have been released under the BTO exercises and 5,387 flats under the SBF scheme. By September, 4,860 more BTO flats will be released in Bidadari and Punggol Northshore while 4,000 will be released in an on-going SBF exercise.
URA flash estimates reveals 0.9 per cent price decline from April to June
This makes it the seventh consecutive quarter of slumping private residential home prices, the longest succession of losses in 13 years. The previous time prices plummeted this long was in September 2000, which lasted eight successive quarters. Flash estimated announced by the Urban Redevelopment Authority (URA) on 1 July, showed that the outside core region (OCR) was most affected by a 1.2 per cent price decline, compared to its 1.1 per cent drop in the last quarter. The core central region (CCR) declined by 0.5 per cent, more than its 0.4 per cent drop in the last quarter and the rest of central region (RCR) fell by 0.5 per cent, which is a slight improvement from its 1.7 per cent drop in the last quarter.
Residential property curbs have been introduced in 2009 to prevent the property market fromoverheating due to low interest rates and high foreign buyer demand. Measures have included a limit on debt repayment costs, pegged at 60 per cent of an individual’s income per month, and increases in stamp duties and real estate taxes.
In an interview with Today Online, Singapore-based managing director at real estate broker Chestertons, Mr Donald Han, said, “The mortgage rules have impacted volumes a lot, which have more than halved, and that’s now showing in prices… We expect the same downward trend to continue for the next two quarters”. Mr. Han also added that prices may drop 4 per cent to 5 per cent in 2015.
URA will update statistics in four weeks when it will issue the complete real estate statistics for 2015’s second quarter, which records comprehensive data on stamp duty records and new projects take-up.
Slow property market growth due to TDSR
The Total Debt Servicing Ratio (TDSR) framework’s limitation on car and home loans has been cited as being responsible for the sluggish private housing market, according to market observers who spoke with Channel NewsAsia. The TDSR, which was implemented on 29 June 2013 to curb debt payments, is said to have brought about the drop in units sold from 14,938 in 2013 to 7,316 private homes sold in 2014.
With the TDSR expected to be implemented permanently, and with the private property market appearing to moderate, market watchers have urged the government to relax policies such as the Additional Buyer’s Stamp Duty (ABSD). ABSD is meant to prevent local buyers from purchasing another home and restrict foreign buyers from entering the market.
In an interview with Channel NewsAsia, Mr. Ismail Gafoor, Chief Executive of PropNext Realty, said that there is existing demand, however buyers are hesitant due to cooling measures. Because of buyers on a budget, developers have also been careful with their launches. A declining number of project sales have been observed since June 2013, from 15 (June 2013) to seven (June 2014) to three this June. PropNext Realty noted that this might pressure weaker developers to quit.
In an interview with Channel NewsAsia, Ms Chia Siew-Chuin, Research & Advisory Director at Colliers International said, “Most developers here in Singapore would have accumulated quite a bit of profits during the early years of the recent residential property boom and that has actually given them the capacity and holding power to ride out these subdued market conditions”. However she also noted that those unable to endure the weak property market may eventually leave.
BTO’s higher income ceiling will make little difference to property market
A majority of analysts are welcoming the move for a higher income ceiling for Build-to-Order (BTO) flats and executive condominiums (ECs), citing reasons such as a cool off in demand for new HDB flats and higher combined salaries as a result of later marriages.
“Today, the subscription rate is about 1.5 to two, which means most of the demand has been absorbed, and with this greater supply, opening up to a higher increment of the income ceiling is the right thing to do” said PropNex Realty’s CEO Mr Ismail Gafoor, in a Channel NewsAsia interview. He also noted that subscription rates were four to five times three years ago.
Additionally, the raised income ceiling is unlikely to affect the property market as there are benefits to purchasing existing HDB resale flats and private property. HDB resale flats are still in demand for their shorter waiting time and location in mature estates.
However, in an interview with Channel News Asia, Colliers International’s director of research and advisory, Chia Siew-Chuin, said “certain conditions must exist first to justify the raising of the income ceiling.” Ms. Chia added that, as of now, the market is relatively more stable than before and prices are slowly moderating.
Plans underway to allow foreign ownership of Indonesian property
Indonesia is making plans to allow foreigners to own property, said its Finance Minister, Bambang Brodjonegoro. In an interview with OPP Today, Teten Masduki, a communications aide to Indonesian President Joko Widodo, said that If successful, alterations will be made to the current Indonesian regulation No. 41/1996 which bans foreign ownership and possession of any domestic property type. However it is likely that foreign ownership will be restricted to luxurious apartments in the major cities, tagged at IDR5billion (approximately S$376,000) and above.
Developers would also need to make provisions for national buyers as a priority. If approved, this also means more tax revenues as foreign buyers would follow existing rules which includes the luxury sales tax (PPnBM).
Singapore and Australia signs a Comprehensive Strategic Partnership
Singapore has signed its first pact with another country, having endorsed a comprehensive strategic partnership with Australia on 29 June. The partnership outlines bilateral relations for the next ten years, and is aimed at ensuring better amalgamation of both countries’ financial and capital markets.
Plans are also underway to analyse Australia’s Foreign Investment Review Board perimeters for Singapore investors. This would impact investments into each country. Singaporean investment in Australian property and companies is estimated to be S$60.5 billion, and is Australia’s fourth highest source of foreign investment.