HDB resale prices in Q3 ratchet up another 2%
Prices of resale flats stayed at a record high in the third quarter, after having grown at the fastest pace of the year.
But while analysts expect the upward trend to continue, they do not forecast runaway prices.
The Resale Price Index (RPI) for Q3 stood at 197.9, an increase of 2
per cent over the previous quarter, data from the Housing and
Development Board (HDB) showed yesterday. This was in line with earlier
official estimates.
Resale prices had grown at a 1.3 per cent clip in the second quarter, and 0.6 per cent in the first quarter.
For the first nine months of the year, prices have gone up 3.9 per cent, the HDB said.
The number of resale transactions fell 6 per cent to 6,560 from Q2,
after surging 19 per cent in the previous quarter, the HDB said.
On the demand side, analysts cited buyers who cannot or prefer not to
wait for a new flat, second-time home buyers and those ineligible for
Built To Order (BTO) units, such as permanent residents and singles, for
driving up prices.
As the cost of resale flats have headed north, so too has the premium
that buyers have to pay out of pocket. The median cash-over- valuation
(COV) in Q3 rose between 15 and 20 per cent from the previous quarter to
$30,000 overall, data from analysts showed.
HDB figures bear this out. For instance, the median COV for a five-room
flat in Bishan in Q3 was $66,500, and that for a four-room flat in
Queenstown, $55,000. In the previous quarter, the figure was $46,500 for
such Bishan flats and $43,000 for Queenstown ones.
Eugene Lim, key executive officer at ERA Realty, agreed broadly with
that reading, citing a low unemployment rate here and a growing economy.
Prices could also face pressure from the recent cap on home loan
tenures, as homeowners may simply drop their plans to move, he said.
"That adds to the supply crunch of HDB resale flats."
That said, analysts do not expect growth for resale flat prices to
reach the rates of the previous two years. They forecast overall
increases of 5 to 7 per cent this year, compared to the 10.7 per cent
last year and 14.1 per cent the year before.
The record 27,000 BTO units that the HDB is offering this year will help offset any sharp hikes, said Mr Lim
Source: Business Times – 30 October 2012
Heron Bay penthouse sold for record $1.774m
A new record price of $1.774 million has been set for a five-bedroom
penthouse unit in the recently launched Heron Bay executive condominium
(EC), surpassing last week's transaction for the most expensive EC to
date.
Last week, a double-storey penthouse at 1 Canberra in Yishun was sold for $1.61 million, setting a record for EC transactions.
To be sure, the higher prices are largely due to the size of some of these new ECs, analysts said.
The price for the Heron Bay penthouse unit, which stands at 2,845 sq
ft, was $624 per square foot (psf). The unit price for the 2,716-sq-ft 1
Canberra unit was $595 psf.
Before the 1 Canberra unit made headlines, a 2,476-sq-ft unit at The
Rainforest in Choa Chu Kang was the most expensive EC with a price tag
of $1.58 million, which translated to $637 psf.
ERA Realty key executive officer Eugene Lim said these skyrocketing prices do not reflect overall pricing for ECs on the whole.
"These type of transactions are not common. It is a one-off for big
units, which is why there is a premium pricing to it," he said.
The smallest unit at Heron Bay, a 775-sq-ft two-bedroom unit, sold for about $553,000 or $713 psf.
In its opening weekend of sales which started on Oct 26, more than 90
per cent of units were snapped up, reflecting the healthy demand for
ECs. The average selling price was $725 psf.
Earlier this year, Heron Bay also set a record for the number of
applications it received relative to subscription rates for an EC over
the past few years. There were 1,664 applications for its 394 units,
which translated to approximately 4.2 applicants for each unit.
"EC home-buyers today are more sophisticated as they expect better
quality and service and at affordable prices, and this is where Heron
Bay addressed their needs. Otherwise, it would have been another
cookie-cutter, utilitarian EC project," said Leslie Lim, managing
partner of EVIA Real Estate Management Pte Ltd, one of the developers of
Heron Bay.
Other developers in the consortium are Ho Lee Group, See Hup Seng and CNH Investment.
Construction for Heron Bay is due to be completed in 2016.
Source: Business Times – 30 October 2012
Two bungalows sold for $26.1m and $10.38m
There has been no dearth of bungalow transactions recently, despite signs of a slowing economy.
A Good Class Bungalow (GCB) at 27 Olive Road was sold for $26.1 million
while another bungalow at 44 Faber Drive was sold for $10.38 million.
The GCB at 27 Olive Road was put up for sale by the estate of the late
Khoo Oon Teik via an expression of interest exercise which closed on
Sept 18, 2012.
Nestled in a GCB enclave at Caldecott Hill Estate, the bungalow has a
land area of 23,423 square feet, which translates to a land rate of
about $1,114 per square foot (psf).
Transactions of properties along Andrew Road and Olive Road typically fetch prices of $1,100-$1,200 psf.
A bungalow along Olive Road is believed to have changed hands for about $30 million or $1,185 psf earlier this year.
The second bungalow at Faber Drive is located at an elevated site of
11,719 sq ft. This reflects a land rate of approximately $886 psf.
Future developments for the Faber Drive bungalow site could see the construction of two smaller detached houses.
Source: Business Times – 30 October 2012
Coming up: Over 100,000 housing units
The number of new private properties in the pipeline has ballooned to
more than 100,000 units at the end of the third quarter, said the Urban
Redevelopment Authority (URA) yesterday.
The news may bring cheer to buyers concerned
about the persistent uptick in prices but dismay to those who had bought
for investment or leasing purposes.
The upcoming private home supply comprises 83,975 private residential
units, 9,824 executive condominiums and 10,070 units from land sites
that the Government has sold, or that are slated for sale. This is the
highest-ever total recorded since data was collected in 2001.
The URA said many of the units will be completed in the next three or
four years. More than 35,000 units will be ready next year and in 2014,
with the rest completed after that.
More than 36,000 private residential units or about 44 per cent of the
upcoming supply remain unsold. Developers have some leeway to hold back
units, but not much. A cooling measure last year requires that they
build and sell residential units within five years or face a 10 per cent
stamp duty.
In addition, the Housing Board (HDB) announced yesterday it will roll
out another 6,400 Build-To-Order flats next month in Bedok, Choa Chu
Kang, Queenstown, Sengkang and Toa Payoh, bringing its crop of new flats
this year to the promised 27,000 - also a record high.
The hefty numbers, combined with the Government's move to slow the
influx of foreign labour, will likely hit the rental market the hardest
in the coming years, said analysts.
The vacancy rate of completed private residential units has increased
slightly to 6.1 per cent in the third quarter from 5.9 per cent the
quarter before, said the URA.
Low interest rates will sustain buying momentum but "if interest rates
shoot up, there will be a glut everywhere", said ERA Realty key
executive officer Eugene Lim.
For now, buyers seem undeterred and willing to pay. Private home prices
rose 0.6 per cent in the third quarter, up from 0.4 per cent in the
second quarter. The HDB's resale price index climbed 2 per cent, up from
1.3 per cent in the second quarter.
Developers sold more private units in the third quarter - 5,916, up
from 5,402 in the second quarter - despite launching 20 per cent fewer
properties.
As has been the case since cooling measures brought the number of
foreign buyers down, demand in the third quarter was driven by
mass-market homes in the suburbs. About 74 per cent of the units sold by
developers were in the outside central region, which saw prices rise 1
per cent, compared to the 0.1 per cent uptick in the core central
region.
Shoebox units accounted for 16 per cent of all sales in the quarter,
less than the 19 per cent in the previous quarter, said the URA.
In the HDB resale market, analysts said a bottleneck in the supply of
flats is sustaining price inflation. Resale transactions fell by 6 per
cent to 6,560 cases in the third quarter.
More HDB upgraders are holding on to their flats when they buy a
private home, preferring to lease them out rather than release them into
the resale market, they said, in the belief that they can make money
from rental yield, and sell for a higher price later.
According to the HDB, the number of flats approved for sub-letting grew
to 42,920 in the third quarter. They form about 4.5 per cent of the
total stock of flats.
Source: The Straits Times – 30 October 2012
HDB, URA release more rental data
The authorities are releasing more information on rentals to help landlords and tenants get a fuller picture of their options.
The rental data on private and public housing will be made available by
the Urban Redevelopment Authority (URA) and the Housing Board (HDB)
respectively on their websites.
The move, said the agencies yesterday, is aimed at providing timely
information on rentals and helping people make informed decisions before
signing a contract.
Those thinking of renting out an HDB flat, for instance, are now able
to check the monthly rental for a particular room type at a specified
block and road, if the transaction was done within the past year. They
would also be privy to when the lease was taken up.
To protect the privacy of owners, unit details, such as the level and floor area, are not given.
Previously, information on HDB rentals was restricted to the median amount, and broken down by town and flat type.
As for private properties, one is now able to check the monthly rental
for a unit in a particular condominium or executive condominium and
landed home, from as far back as the start of this year.
Such data includes the number of bedrooms if they are non-landed units, size of the place, street name and postal district.
In the past, the URA provided general information such as the aggregated median per square metre rentals for a project.
But the provision of more information does not necessarily lower
rentals. "It will make the market work more efficiently but rising
rentals are due to demand and that has not changed," he added.
Rentals of private residential properties rose by 0.9 per cent in the
third quarter this year, compared to 0.3 per cent in the second quarter.
On the HDB front, the number of subletting transactions rose 4 per cent, compared to 3 per cent in the previous quarter.
Source: The Straits Times – 30 October 2012
Room for more property cooling measures?
The local residential property market seems to have defied six rounds of cooling measures over the past three years.
The latest measure, introduced earlier this month to stop home buyers
from over-extending themselves, has had little discernible effect on
developers' home sales so far.
Some smug property investors may see this as another instance of King
Canute trying to hold back the tide - the tide being the assumption that
demand for property in economically strong and politically stable
Singapore will always remain high.
But, in fact, the tide in this case is coming in from far beyond
Singapore's shores. And there's a rip current in it that can endanger
the naive investor who wants to surf the waves.
It isn't just Singapore that is taking measures to cool overheating
property markets. There are no easy ways to stem the strong flow of
cheap money from abroad, afforded by the ultra loose monetary policy
that is being pursued by the central banks in the United States,
Britain, the euro zone and Japan.
In Singapore, the latest government measure sought to restrict all home
loans to a more reasonable timeframe, of up to 35 years.
Home buyers who take a loan that lasts more than 30 years, or extends
past their retirement age of 65, will now have to fork out significantly
more in cash.
Where previously a buyer may borrow up to 80 per cent of the property's
value for his first mortgage, he can now do so for up to 60 per cent if
he busts the 30-year loan or 65-year-old age limit. Under a similar
scenario, the borrowing ceiling shrinks to just 40 per cent for his
second and subsequent mortgages.
The new rules are a further refinement of a previous measure to tighten the loan-to-value ratios.
Other measures included creating new stamp duties; up to 16 per cent on
the seller and an additional buyer's stamp duty that goes as high as 10
per cent for foreigners.
Taken together, Singapore is said to have put in some of the harshest
property cooling measures in the freewheeling capitalist world.
Is the Government running out of ammunition under its calibrated approach to cool the market?
Not by a long shot, judging by the range of measures that other
regional economies have pursued to combat their rising domestic home
prices.
Malaysia, for instance, has imposed a real property gains tax (RPGT) -
similar to a capital gains tax - of up to 10 per cent for properties
disposed of within two years.
Hong Kong, meanwhile, has introduced rules limiting the maximum loan
tenor of new mortgages to 30 years and lowering the debt servicing ratio
limit - a borrower's total monthly debt payments divided by his net
income - to 40 per cent for certain purchases.
Many of their measures are similar to Singapore's. The most common are:
lowering the loan-to-valuation ratio for certain home purchases,
imposing a penalty for those who flip properties in a short span of time
and raising the barrier of entry for foreign home buyers.
In 2010, Malaysia raised the minimum price of residential property that
foreigners can purchase to RM500,000 (S$200,800) from RM250,000
previously. There is speculation that this might be further raised to
RM1 million.
When these measures did not have the desired effect, the Malaysian
government rolled out another round of measures that will include a hike
in the RPGT from Jan1 next year.
Hong Kong last week announced fresh measures that impose a stamp duty
of 15 per cent on home purchases by foreigners, as well as raise the
resale tax on property by about 5 percentage points and extend the
period during which it will apply from two years to three.
It is also slated to start banning foreigners from buying new homes in
the city, with a pilot scheme on two sites restricting sales to
permanent residents of Hong Kong.
The city's sizzling real estate market has seen prices skyrocket about
85 per cent over the past 21/2 years, buoyed by demand from mainland
Chinese buyers.
But the most draconian measures can be found in China, where the
authorities have restricted the number of properties that a household
can own in bustling cities such as Beijing and Shanghai.
Being an open city, however, Singapore is unlikely to implement such socialist measures outside the realm of public housing.
Here, it bears mentioning that the Government is most concerned with Housing Board flat prices.
This is not surprising, given that 80 per cent of Singaporeans live in
HDB flats. The Government cannot allow prices - at least those of new
flats - to climb beyond the affordability of most first-time buyers.
As the HDB market has a symbiotic relationship with private housing -
except at the very high end - cooling the private housing market is also
a way of cooling the HDB resale market.
As a result, the latest cooling measure is unlikely to be the last if
demand for housing shows no sign of abating and prices continue to head
north.
The good news is that private home prices have
risen by just 1 per cent in the first nine months of the year. However,
resale HDB prices have climbed by 3.9 per cent over the same period.
Until both the public and private housing markets show clear signs of
stabilising or softening, the next stick may not be too far away.
Taking its cue from cooling measures implemented by other countries,
one additional measure the Government can consider is curbs to restrict
the number of homes that foreign buyers can purchase - or subjecting
them to a hefty multiple ownership tax.
Alternatively, simply tightening the screw on existing measures may
also be effective. For instance, the period where the seller's stamp
duty is applied now can be lengthened from its current four years, or
tax rates can be hiked further.
But whether or not to unleash more draconian measures will be a key
decision for policymakers down the road, considering Singapore's
reputation as an open and free economy.
The property market is a key plank of the economy and its health is closely intertwined with the wealth of Singaporeans.
Regional countries have introduced outright bans on foreign ownership,
capital gains tax on property and even restrictions on the number of
properties citizens can own. These are levers Singapore has not
contemplated - at least publicly.
But whichever levers it pulls, the Government must continue with its
calibrated approach: keep Singapore's economy generally free and open to
foreign investment, while keeping the property market on an even keel.
That calls for more smart manoeuvring.
Source: The Straits Times – 30 October 2012
