Local Property News
Population of UHNWIs fell in 2015; prices of luxury homes likely to fall in 2016
According to Knight Frank’s Wealth Report 2016, Singapore’s ultra-high net worth individuals (UHNWIs, net assets of US$30+ million ) declined by eight per cent in 2015, falling from 2,565 in 2014 to 2,360 last year. The reduction is not a result of Singapore losing its attractiveness, but due to the global market downturn and market volatility. The report added that the number of UNHWIs in Singapore will grow by 48 per cent over the next 10 years, an additional 1,133 individuals.
Despite the growth in UNHWIs, Knight Frank Singapore’s head of consultancy and research Alice Tan, believes that Singapore’s luxury homes will see prices fall 3.3 per cent. Lacklustre demand for luxury homes is largely a result of cooling measures keeping potential buyers at bay.
Property cooling measures unlikely to be relaxed soon
According to Urban Redevelopment Authority (URA) statistics, as of Q4 2015, private property prices have dipped 8.4 per cent compared to Q3 2013’s peak. Despite nine consecutive quarters of price drops, prices are still far from being corrected considering they increased 60 per cent after the global financial crisis to their peak. In view of this, Minister of National Development Mr Lawrence Wong said in Parliament that it is still premature to relax property cooling measures as it could lead to a market rebound.
Strong demand for Bidadari units in February BTO Launch
Five-room and multi-generation units launched in Bidadari Alkaff Oasis continue to see strong demand from home buyers in the first Build-to-Order (BTO) sales exercise of 2016. As of 5pm on 1st March, the application rate is 12.8 per cent, with 3,020 applicants competing for 236 units. Second-timers outnumber first-timers, accounting for 91 per cent of applications. The next BTO application is in May, with more than 4,000 new flats being launched in mature estates such as Ang Mo Kio, Bedok and Bukit Merah.
NUS SRPI: Prices of completed condominiums rise marginally
The latest National University of Singapore (NUS) Singapore Residential Price Index (SRPI) shows that prices of completed condominium units rose marginally, by 0.1 per cent in January 2016 compared to December 2015. Prices of prime units in the Central Region dipped 0.5 per cent in the same period.
Results are based on transactions received up to 22 February 2016, and tabulated with an updated property basket. The new basket consists of 574 private residential projects completed between October 2003 and September 2015, spread across 26 postal districts.
Wandervale EC oversubscribed by 40 per cent; 1,450 vacant EC units remain as of Q4 2015
According to Sim Lian, developer of Wandervale EC, the project was more than 40 per cent oversubscribed at the end of its application period. The first EC of 2016, Wandervale EC is a 99-year leasehold development situated within walking distance of Choa Chu Kang MRT station and bus interchange, with 534 units.
Data from the Urban Redevelopment Authority (URA) indicates there were 1,540 vacant EC units as of Q4 2015. OrangeTee analyst Celine Chan said the current EC vacancy rate is 8.4 per cent, a result of the increased completed supply and the time lag between projects being completed and owners moving into their new units, or investors purchasing ECs as an investment and leaving them unoccupied during the Minimum Occupation Period (MOP).
Global Property News
Chinese Developers focusing on overseas markets
With China’s economy slowing, Chinese property developers are looking to develop entire cities from scratch. Such developments include the $40 billion Forest City project in Malaysia, where Country Garden Holdings Co., a Chinese developer, is reclaiming four islands with plans to construct an “eco-city” to accommodate up to 700,000 people.
According to real-estate services firm JLL, more than $9 billion was spend by Chinese groups on development sites globally in 2015, a 50 per cent increase from the $6 billion spend in 2014. These developers are increasingly wary of oversupply in China, and have shifted their focus to overseas markets – targeting locals as well as Chinese investors looking to shift their money beyond the reach of Beijing’s authorities.
According to Knight Frank’s annual Wealth Report, Chinese investors contributed US$1.03 trillion to investments in foreign property, stocks and bonds in the decade to mid-2015.
Further indications of a cooling US residential property market
According to the National Association of Realtors (NAR), the NAR’s pending home sales index dipped to 106 in January, down 2.5 per cent compared to December’s reading of 108.7. Compared to January 2015, pending sales increased 1.4 per cent in January 2016. While the index rose year-on-year for 17 consecutive months, January 2016 recorded the smallest rise since September 2014. These results provide another indication of a slowing US housing market. Even though prices of new homes dropped significantly, new-home sales dropped 9.2 per cent.
Prices of prime property in London falls, with bleak outlook
According to Knight Frank LLP, property prices in prime London fell 0.6 per cent, with property in Knightsbridge, South Kensington and Chelsea dropping seven per cent, 3.3 per cent and two per cent respectively in the 12 months up to February.
The UK housing market looks bleak, with lending likely to be tightened by the central bank due to mortgage approvals registering a two-year high in January, coupled with consumer credit expanding at the fastest pace in a decade. Furthermore, the number of wealthy investors granted visas to live in the UK fell 84 per cent in 2015, after the minimum investment required for the permit was doubled to two million pounds, in November 2014. This might affect developers, as there are plans to construct more than 25,000 luxury properties over the next decade according to consulting firm Arcadis, and the reduced number of visas for the rich means there will be a smaller pool of foreign investors looking to purchase luxury homes in London.
Median prices of Australian homes fall with further dips expected
CoreLogic Inc. said prices of Sydney dwellings rose for the second month consecutively, reducing losses registered at the end of 2015. Despite the increase, Sydney home values are still down by 0.2 per cent over the past three months. CoreLogic added that median prices for homes in Sydney also dipped 4.6 per cent in February, the greatest dip since 1990. From the October peak of A$800,000, median home prices fell to A$735,000 in February, which CoreLogic attributed to fewer luxury homes offered for sale during the end-of-year period. Analysts expect further declines.
However, according to Knight Frank’s most recent quarterly Prime Cities Global Index report, the Australasia region was the strongest-performing for luxury residential property price growth in 2015. Sydney led the region, with luxury residential prices going up 14.8 per cent in 2015 compared to the year before. Luxury home prices in Melbourne saw strong growth as well, with a rise of 11.9 per cent for 2015.