Week in Review – 31 December 2014

2015 to see a stabilised property market and potential return of buyers, HDB Survey shows more families living together, Shoebox unit rentals likely to fall by up to 10%, More transparency in disclosing unit prices
2015 to see a stabilised property market and potential return of buyers
Private homes resale prices have seen a decline in November, falling 0.3 per cent month-on-month according to Singapore Residential Price Index (SRPI) flash estimates released on 29 December. Earlier this month, data from Singapore Real Estate Exchange showed that Housing and Development Board (HDB) resale flat prices in November had also decreased month-on-month, by 0.8 per cent. HDB resale flat prices have fallen by 9.8 per cent since the last peak in prices in April 2013. 
National Development Minister Mr Khaw Boon Wan stated during the handover ceremony at the Waterway Woodcress Build-to-Order project on 29 December that the continued decline of resale prices for HDB flats is considered a positive development. Mr Khaw explained that the correction of resale HDB prices, which will continue into 2015, will contribute to greater stability in HDB prices. For private homes, analysts who spoke with TODAY commented that the price moderation and fall in transactions are more aligned with the current economic growth rate for Singapore which is estimated to be slower for 2014. 
Lesser new HDB flats (16,900) will be launched in 2015 compared to 2014 where 28,000 flats were launched, so as to scale back the pace of construction. Sites for private homes under the Confirmed List of Government Land Sales (GLS) programme for H1 2015 will also be reduced by approximately 23 per cent. The upcoming sites will yield about 3,020 private homes, compared to 3,900 units on the Confirmed List for H2 2014. In his blog, Mr Khaw indicated that there is an ongoing transition from a seller’s to a buyer’s market in 2014, however he noted that “The shift is not yet complete and 2015 should see greater stability”.
Regarding how much prices should drop before cooling measures are eased, Mr Khaw said in an interview with TODAY that he favoured a single-digit decline to prevent “heartache” for buyers.  Cooling measures such as the Total Debt Servicing Ratio (TDSR) are set to stay for now however.  Mr Khaw suggested for home buyers to spend within their means and for private property developers to price their units properly to ensure that they meet their Qualifying Certificate (QC) deadlines.
Separately, CBRE noted in its December report that homes have only become marginally affordable since the introduction of TDSR in June 2013. The report stated that “developers are prepared to continue to hold prices as much as they can even as sales volume continues to fall.” CBRE concluded that the volume of home sales to remain relatively unchanged in 2015 and that “home prices are likely to see modest corrections until they reach an equilibrium.” Additionally, property analysts who were interviewed by TODAY expect more buyers to enter the property market in 2015 as more developers launch their projects before their QC deadlines, increasing choices for buyers. Buyers may also return having accumulated wealth over the past two years. Mr Alan Cheong, Senior Director of Savills Research, said, “Assuming property curbs did not induce a change in market behaviour towards residential homes, what these did was merely raising the barriers for liquidity to flow into the market … From the implementation of the Total Debt Servicing Ratio (TDSR) in June 2013, the workforce would have enjoyed two pay rises by the first half of next year — one for 2014 and the other for 2015. In addition, two bonuses would have been paid out”.
HDB Survey shows more families living together
On 26 December, HDB announced the findings from the 2013 Sample Household Survey, which was conducted with 8,000 households across all HDB towns and estates. Conducted every five years, the latest survey indicated slight rise in percentages for categories such as the overall satisfaction with estate facilities, the sense of belonging to residents’ towns or estates and value for money for their flats. The survey also found that the percentage of younger married couples living with or in close proximity to their parents increased slightly from 35.5 per cent in 2008 to 36.7 per cent in 2013. The proportion of older residents living with their married children also increased, from some 14.3 per cent in 2008 to 19.1 per cent in 2013.
The Ministry of National Development will continue to focus on helping families who wish to live closer together in 2015. In November a proportion of Build-To-Order (BTO) flat supply was provided for this profile of buyers.
Another key focus area for 2015 is to meet the housing needs of singles and elderlies. When interviewed by Channel NewsAsia National Development Minister Mr Khaw Boon Wan assured that the construction pace for homes catering to singles will not slow down and more options would be explored to better meet their housing needs. 
Shoebox unit rentals likely to fall by up to 10%
A record number of shoebox units will be built from 2015 to 2016 according to property consultant SLP International. 6,200 shoebox units will be built in the next two years compared to the annual average of 3,000 units for the last decade. When interviewed by Channel NewsAsia, property analysts estimated that this increment of supply would cause rentals of shoebox units to drop by five to ten per cent in the future. Mr Nicholas Mak, Executive Director of Research & Consultancy at SLP International added that rental yields for shoebox units that are less accessible would be less positive. 
More transparency in disclosing unit prices
The Urban Redevelopment Authority (URA) will release the nett prices of individual units sold by developers on its website from H1 2015 onwards. The existing Property Price Index (PPI) provided by URA covers the whole private housing markets, including properties that are uncompleted and landed. This change will provide buyers with more information and details that are necessary to negotiate for a better deal.