Lake Life prices reduced to maintain affordability, Increase in supply of Parenthood Provisional Housing Scheme (PPHS) flats, Spike in bank non-performing housing loans, Strong interest in Melbourne property market
Lake Life prices reduced to maintain affordability
Pricing for Lake Life, an executive condominium (EC) in the Jurong Lake District, will be lower than its initial indicative level. The 99-year leasehold project will be priced at an average of $857 per square foot, with unit prices ranging from $799 to $930 per square foot. The project developers, Evia Real Estate, have priced 84 per cent of units at less than $1.1 million, to keep prices affordable.
Vincent Ong, Managing Partner of Evia Real Estate, expressed concerns to TODAY about the risk of excess supply in the property market – private units, Build-to-Order (BTO) flats and ECs – affecting sale of hybrid public-private homes such as ECs. The consortium of developers led by Evia Real Estate analysed the profiles of its 1,853 e-applicants, revealing that the purchasing power of these potential home buyers was lower than anticipated. The EC will begin bookings on 8 November. Mr Ong predicts half the units will be sold during the first weekend.
The Ministry of National Development (MND) has addressed concerns about the build-up of surplus property in the market. It announced previously that BTO flat supply would be reduced from 22,400 to 16,900 units in 2015. The MND stated in the Singapore Business Review, “our focus is on ensuring a smooth transition from the ramp-up to a more sustainable phase, as the supply and demand for BTO flats achieve a better balance.” Approximately 4,000 two-room flats will also be included in next year’s BTO supply to meet demand from single and low-income families.
Following price decreases in private and HDB properties in Q3, prices in Singapore are expected to continue falling due to increased supply and tight financing measures. In a speech at Credit Counselling Singapore’s 10th anniversary lunch, Deputy Prime Minister and Finance Minister, Mr Tharman Shanmugaratnam said, “If we do not get a meaningful reversal after each upswing, property prices will run ahead of the growth of household incomes over the long term, which we should avoid.”
Increase in supply of Parenthood Provisional Housing Scheme (PPHS) flats
The Housing and Development Board (HDB) has announced that further enhancements will be made to the Parenthood Provisional Housing Scheme (PPHS), so as to increase the supply of PPHS flats offered to couples and young families. The PPHS was introduced last year to offer families temporary housing with affordable rental rates, while they wait for their new HDB flats to be ready. An additional 800, mainly three-room flats, will be made available in the Bukit Merah and Queenstown areas, increasing the supply, which stands at 1,150 units.
Starting 1 November, new applicants and existing tenants of PPHS flats can opt to co-rent their flat with another eligible family within this scheme, allowing households to reduce rental expenses. All flat-types will be provided the option to co-rent, with a maximum of two eligible families per flat. Mr Khaw Boon Wan, Minister for National Development noted to TODAY that the vacant flats consist of larger units, hence the option to co-rent “will be useful for those who feel that they do not need a whole flat, especially if it is four or five-room.” The HDB is currently retrofitting the additional PPHS flats, after which they will be progressively made available to applicants starting early 2015.
Spike in bank non-performing housing loans
Overseas-Chinese Banking Corp (OCBC) Banks Q3 2014 financial results revealed an increase in housing non-performing loans (NPL), increasing by 20 per cent, from S$227 million to S$272 million year-on-year. United Overseas Bank (UOB) also reported that housing loan NPLs increased by 12.3 per cent to S$502 million from Q2 2014 to Q3 2014. The report noted the increase in NPLs was due to borrowers investing in a particular high-end residential development in Singapore. Although the bank declined to identify the project, the total NPL associated with this unnamed project was S$166 million. The report stated that, “This NPL was well collateralised with minimal impairment charge. Excluding the NPL from this isolated case, overall housing loans remain relatively flat.”
Strong interest in Melbourne property market
According to a mid-2014 report by Radio Australia, Melbourne has been attracting significant numbers of investors from Singapore, Hong Kong, Indonesia and Mainland China. Singaporean firm World Class Land recently launched sales for its Melbourne-based residential development – Australia 108. The launch saw 69 per cent (133 out of 193) of its units snapped up by Singaporean buyers.
Malaysian developers, including UEM Sunrise, have also been investing in the Melbourne property market. The New Straits Times reported that Aurora Melbourne Central saw strong sales during its recent exclusive preview in Kuala Lumpur on 31 October 2014; 90 per cent of 200 allocated units were sold.