Week in Review – 8 January 2015

2014 saw significant price declines for HDB resale and private residential properties, Foreign buyers will continue investing in local property market: Maybank Kim Eng report, Building of Fernvale Link temple to continue says HDB and URA, Mortgage payments set to rise as US moves closer to an interest rate hike, Luxury condominium Marine Blue ready for release
2014 saw significant price declines for HDB resale and private residential properties
Resale prices for public housing properties and private residential properties declined significantly in 2014, according to the HDB and the URA. The latest flash estimate of the HDB Resale Price Index revealed that prices dropped by 1.4 per cent in Q4 2014, resulting in an overall decline of 6.1 per cent in 2014. This is the biggest fall since 2001 (8.2 per cent) according to Mr Ismail Gafoor, Chief Executive of PropNex Realty, interviewed by TODAY. 
URS flash estimates of the private residential property price index showed a one per cent dip in Q4 2014, resulting in an overall decline of four per cent for 2014. This annual decline is the first since 2008. 
In the Core Central Region (CCR) and Outside Central Region (OCR), prices of non-landed private properties recorded a 0.9 per cent fall in the fourth quarter of 2014. Non-landed private properties in the Rest of Central Region (RCR) registered the largest decline, of 1.2 per cent, compared to a milder 0.4 per cent dip in the third quarter. For the whole of 2014, prices in CCR, RCR and OCR fell by 4.1 per cent, 5.2 per cent and 2.2 per cent respectively. Speaking to the Singapore Business Review (SBR), Mr Alan Cheong, Senior Director at Savills said that for 2015 however, “Properties in the Core Central Region (CCR) will see the biggest declines, while prices in the Rest of Central Region (RCR) and the Outside Central Region (OCR) will either remain flat or inch down marginally.”
The residential property market will see prices continue to moderate by four per cent to ten per cent in 2015, according to several property analysts interviewed by SBR. The expected decline is attributed to various reasons, including the cooling measures, upcoming supply of homes, weak buyer sentiment and the expected hike in interest rates.
Foreign buyers will continue investing in local property market: Maybank Kim Eng report
Concerns are increasing over potential loan defaults by foreigners who purchased properties in Singapore between 2005 and 2011, however Maybank Kim Eng reports that the danger of these investors withdrawing from the market completely and the subsequent impact on local banks is not significant. Maybank Kim Eng noted, “We see minimal risks of a massive withdrawal of foreign equity from the housing market without a global economic collapse. We take comfort in the tighter credit criteria applied to foreign investors since 2009. With their LTVs at less than 60 per cent, banks should be fairly protected.”
Data from Maybank Kim Eng reflected that an increasing number of luxury properties were sold at a loss in the second half of 2014. Of the top 10 loss-making projects in 2014, four were from the prime District 9 of Orchard and four were on Sentosa island. However these luxury homes transacted at a huge loss are “sporadic” and “isolated”. The report stated that “While defaults emerging at such an early stage of the market’s downturn may be alarming, it is reasonable to assume that some of these purchases were speculative. They should not be taken as representative of the health of the entire housing market.”
Mr Ng Wee Siang, Head of Research at Maybank, told CNBC, “While there have been more fire sales, some of them have their own peculiar reasons – we can’t jump to the conclusion that it is because foreigners are walking away.” Mr Donald Han, Managing Director at Chestertons Singapore, was also optimistic about the outlook of the housing market, commenting that “the strength of the Singapore dollar vis-à-vis regional currencies and relative stability of the market will keep foreign investors from heading for the exit.”
Building of Fernvale Link temple to continue says HDB and URA
The URA and the HDB released a joint statement on 6 January to respond to public concerns about a columbarium to be built within a proposed temple at Fernvale Link in Sengkang. The agencies assured the residents of the surrounding Build-to-Order (BTO) projects and executive condominium (EC) development that the temple will “integrate well with the surrounding developments, the same way other existing places of worship have been integrated in many residential estates”.  They added that the plot of land had been zoned as a “place of worship” according to the URA Master Plan since 2003 and a majority of places of worship located islandwide include columbarium facilities.
The URA Master Plan provides information on future land use, however property analysts commented to Channel NewsAsia that many home buyers do not know how to access and use the information. However Mr Eugene Lim, Key Executive Officer at ERA Realty told Channel NewsAsia that a certain level of ambiguity remains even after reviewing the Master Plan, “…the Master Plan only tells you about zoning and the density. You won’t know what actually is going to be built until the tender specifications are put up by the URA or HDB.” A disclaimer indicating the potential inclusion of a columbarium was said to have been included in the Fernvale Lea BTO development brochure.
Mortgage payments set to rise as US moves closer to an interest rate hike
Higher mortgage payments are expected in 2015, particularly for highly leveraged households with floating rate plans. The likely rise is due to the upcoming interest rate hike in the United States that may cause an interest rate for a large percentage of housing loans here to increase by twice the rate by end-2015 and by thrice the rate come end-2016. Data from Bloomberg showed that the three-month Singapore Interbank Offered Rate (SIBOR) climbed from 5 January to 0.62052 per cent on 7 January. This was after increasing from the 2 January level of 0.45738.
Luxury condominium Marine Blue ready for release
Luxury freehold condominium Marine Blue by CapitaLand will be launched this month, after a delay of more than a year. Its launch price is predicted to range from $1,800psf and $2,200psf, or an average of $2,000psf according to a report by Square Foot Research. The development located in District 15 of Marine Parade is considered to be more expensive than its counterparts around the area. Square Foot Research noted in the report that the expected price “is 40 per cent higher than the median price of units sold in the past six months from projects located within 250m. Within the immediate vicinity, there was only one transaction, a 1,378-sqft apartment unit from Parc Seabreeze sold in August this year, that broke the $2,000psf mark”.