Inaugural iCities Conference to be held on 21st and 22nd April 2016
From 2000 to 2010, East Asia saw almost 200 million people move to urban areas in search of a better life, a 2015 World Bank study reported. Such a sudden and massive influx of people into urban areas presents city planners and developers with the challenge of ensuring urban areas are planned and developed responsibly, efficiently and provide residents with the sought-after better life.
The inaugural ‘iCities: Urban & Township Development for Emerging Markets’, organised by iProperty Group, will address Asia’s rapid urban growth and highlight the importance of sustainable development – ensuring current developments do not burden future generations – and township planning – infrastructural and social developments. The conference will see senior decision makers from the real estate sector, city planners, engineers and contractors come together to discuss the importance of sustainable development and township planning.
The two-day conference will be held at the InterContinental Kuala Lumpur on 21st and 22nd April 2016. Ticket prices start from USD1,595. For more information, please visit www.iproperty.com.my or www.icities.asia
Property cooling measures may be adjusted once economy is healthy and market is stable
Home Affairs and Law Minister K Shanmugam said that the government has “a rough idea” of when cooling measures will be adjusted. Mr Shanmugam noted that the government is mindful of averting a property market crash. He said, “We managed to avert a disaster (of an overheated market), others are worried now it could go the other way…We want to see a healthy economy, we cannot have a healthy economy if the property market has crashed … So it’s not in the Government’s interest … it’s not in anybody’s interest to see it crash”. Authorities are not likely targeting a specific price point according to ERA’s Key Executive Officer Eugene Lim, who spoke with Today. Mr Lim said, “Various analysts have tried to put a figure to it … some say ‘when the price drops by 15 per cent, the Government will do something’. But the sense we get is there’s no target figure … I think the Government’s consideration is: if we pull back, will that cause prices to rebound quickly? That’s the litmus test.”
Property taxes in Singapore among the highest globally
In Knight Frank’s inaugural Global Tax Report, property tax rates in Singapore are reported as among the highest globally, at over 20 per cent of the property price. The main reason for the high tax rate stems from stamp duties – the Buyer’s Stamp Duty and Additional Buyer’s Stamp Duty (ABSD) – paid when a property is purchased.
Within Asia, the only country that has a higher tax rate is Hong Kong, where property taxes amount to 23.2 per cent to 22.4 per cent of property prices. In Hong Kong, foreign property buyers are required to pay steep stamp duties, resulting in high property taxes.
Developers delaying launches while buyers no longer enticed by “soft discounts”
Residential property launches are being delayed by developers by a month or two, a result property watchers attribute to poor market sentiments, compounded with economic uncertainty. The bulk of new residential supply is expected to be in the Outside Central Region (OCR).
PropNex said developers can consider offering direct discounts in order to encourage purchases. In 2015, regulations were put in place to stop developers from offering “soft” discounts – furniture vouchers and rebates – as strategies to push sales. The new regulations dictate that incentives provided by developers have to be converted to a certain value, have it stated into the option-to-purchase and be factored in when buyers apply for bank loans. As a result, loans get reduced, and such incentives are no longer attractive to buyers.
Weak property market performance in 2015; 2016 prices expected to remain low
According to CBRE Research, prices and sales in the private property market in Singapore might be on the ascent after downtrends for the past nine quarters. Currently, unsold supply is on the low side, while prices have balanced out. The end of 2015 saw 23,000 uncompleted unsold units, a decrease from 27,000 units in 2014. DTZ also reported a 15 per cent dive in Singapore’s property investment sales to $16 million in the last year. According to CBRE, buying interest might rise if the cooling measures are eased. With cooling measures relaxed, it is expected that prices might rise as early as 2018, with the prime segment in the lead.
However, according to BMI, for 2016, property prices will remain relatively low, especially when compared to Hong Kong. Singapore’s property prices remain affordable with the overall price-to-income ratio at approximately 5x. The report also expects investor interest to be relatively weak considering the low yield of property investments – rental yields remain low with the government restricting inflows of skilled foreign workers.
Global Property News
Changes in stamp duties lead to hike in home prices
Due to planned increases in transaction tax on second homes and rental properties, home prices in the borough of Newham jumped 22.1 per cent in 2015, the greatest increase in London. Comparatively, the central borough of Westminster saw prices stagnate, while areas such as Kensington and Chelsea gained 4.3 per cent. Bloomberg’s analysis of Land Registry Data showed that London’s median house price grew 13 per cent year-on-year in December to £431,053 (S$874,000). The only area that saw home prices fall was in the financial district of the City of London – a 3.3 per cent decrease.
According to the Royal Institution of Chartered Surveyors, the November announcement of plans to increase stamp duty charges led to more investor inquiries. Countrywide plc, the UK’s biggest real estate agency, estimates that the stamp duty changes will cost landlords who purchase after April 2016 11 months of rental income on average. The impending tax changes have pushed buyers to rush into buying before April 2016, pushing home prices up in the short term.
Q4 2015 sees records set for luxury property in New York’s Hamptons
In Q4 2015, home prices in New York’s Hamptons rose to a new peak, with buyers making a record number of deals of at least US$5 million. Brokerage Douglas Elliman Real Estate and appraiser Muller Samuel Inc said that in the last quarter of 2015 the average price of houses in Hamptons amounted to US$ 2.38 million – a 16 per cent year-on-year hike – the highest since 2005. 62 out of 613 transactions were priced at US$5 million or higher. There were also 26 transactions with houses priced above US$10 million in Q4 2015, a record number.
Hong Kong sets record for lowest home sales since January 1991
According to Centaline Property Agency, Hong Kong’s home sales have slipped to their lowest in at least 25 years in January 2016, and sales are expected to dip further. Sales of new and secondary homes are estimated at 3,000 units, the lowest monthly figure recorded since data tracking started in January 1991. The previous low was recorded in November 2008, at 3,786 units.
Centaline Centa-City Leading Index shows that home prices have fallen 9.5 per cent since September, with estimates of a further 20 per cent fall in 2016, a result of poor market sentiment.
Hong Kong’s property market had already exhibited signs of weakening due to the supply of homes rising, increasing short-term interest rates and a slowing China market.
Developers have attempted to boost sales by offering discounts, stamp duty rebates and second mortgages, financing up to 90 per cent of the value of a home.
Rapidly developing Hai Phong; Vietnam’s rising star
Hai Phong, a northern Vietnam city, is a rapidly-growing seaport alongside Ho Chi Minh City. CBRE Vietnam says the seaport capacity of Hai Phong is only half of Ho Chi Minh City.
Local authorities have enhanced infrastructure network connections in the city, as the authorities are actively trying to promote Hai Phong to local and foreign investors.
With improvements in its infrastructure, Hai Phong has a number of developments lined up. According to Vietnam’s Ministry of Industry and Trade, at least 12 projects consisting of seven office buildings and five public works are in progress.
Australia’s residential property market rebounds in January
Australia’s residential property prices rebounded in January 2016, contrary to speculation that the property market was crashing after a tepid performance in 2015.
CoreLogic RP data shows that the capital cities combined for a 0.9 per cent rise in January compared to December, when prices stagnated. Prices in Melbourne hiked 2.5 per cent, overtaking Sydney with 11 per cent annual growth, compared to 10.5 per cent annual growth experienced by Sydney.
The Reserve Bank of Australia (RBA) is expected to hold interest rates at two per cent for the eighth month. The RBA has been averse to raising interest rates due to fears of causing a debt-fuelled bubble in prices of residential property. Regulators have tightened lending for property investment, hoping to regulate annual growth in loans to ten per cent or less.
Despite Melbourne’s housing property performing strongly for 2015, business experts believe that Southern Australia, with its stable property market, tax reforms and big supply of land for sale is the country’s best investment location. Despite lower sales volume, the real estate market of Southern Australia is registering new highs; the median house price increased 1.16 per cent, to $435,000 over Q4 2015, a year-on-year increase of 2.35 per cent.
On the other hand, CoreLogic has cautioned that demand for Adelaide’s residential property might be negatively affected in 2016 due to economic woes.