Private home market gaining momentum

For the past couple of weeks, you get the sense that momentum is building up in the private housing market.

In an ironic twist, a private residential site tender at Flora Drive in Upper Changi broke new ground on Wednesday, the same day National Development Minister Khaw Boon Wan said it was not time yet to remove the property market cooling measures.

It was the first site sale to reverse the tide of cautious bids for the past few land tenders. The tender attracted eight bids, with the top offer coming at S$163 million or S$361 per sq ft per plot ratio. This is 11 per cent higher than the S$325 psf winning bid for an adjacent site sold in June which attracted only four bids.

You could say that this day was some time in the making. Even as the past few state land sales attracted lower - and fewer - bids, the point is that they still got sold. The past few years have been golden years for developers, with many achieving strong profits. Many are facing the "good" problem of how best to re-invest these profits. 

But more important than profits for developers is that housing sales are continuing, albeit at stable price levels. 

The latest developer sales numbers for last month showed housing units sold jumping by 20.7 per cent from the previous month, or by 25.8 per cent, including the sale of Executive Condominiums. 

Can the buying momentum continue and surpass the record 16,292 private homes achieved last year? It is a tall order but why not, if - as many have predicted - developers are rushing over themselves to push out their units.

And if sales continue to be robust, can we expect prices to remain unchanged for long since rising prices and sales often always go hand-in-hand?

Adding to the momentum is the ongoing collective sales - but with a big difference this time. The en bloc sale scene has clearly entered a new phase where the majority of owners for some projects are "determined" to sell.

This week alone saw five developments being put up for collective sale - Faber Garden, Dragon Mansion, Newton Lodge, Dunearn Gardens and Jasmine Court.

For the majority of owners in Dragon Mansion and Dunearn Gardens, they are openly lowering their price expectations. If owners are determined to sell, I strongly suspect they will get it sold eventually.

What will be the impact of this continuous stream of collective sales? For one, they will remove some of the housing stock and possibly some rental units - which will lend some support to the rental market.

Some owners will choose to rent while others will downgrade for the time being. This will again impact both the rental market and raise housing sales for existing developments. Others will seize their opportunity to make big money, enough to possibly retire comfortably. 

For these owners and other investors, the path is clear. There is price stability in the private housing market - which means no more cooling measures for the time being. They may even derive some comfort from Mr Khaw's announcement on Wednesday that his top priority for the next two years will be to tend to the housing needs of two groups: Newlyweds and vulnerable families.

As the saying goes, when the cat's away, the mice will play. 

Source: Today, by Colin  AM Oct 21, 2011

Colin Tan is head of research and consultancy at Chesterton Suntec International.

Supply of residential land unlikely to let up in short-term

Supply of land for residential homes is not likely to let up in the short-term.

The government said it will release more land and calibrate measures to ensure property prices are in line with economic growth.

In the addendum to the President's Address in Parliament, National Development Minister Khaw Boon Wan said the government is releasing more land for private housing to meet the aspirations of Singaporeans.

This could mean that more sites will be made available for development when the Government Land Sales Programme for the first half of 2012 is announced in November or December.

Judging by the popularity of recent GLS tenders, executive condominium sites could be on top of the list due to high demand for executive condominium units, which is further strengthened with the revision in income ceiling.

Source : Channel NewsAsia – 12 Oct 2011

En bloc supply gathers pace

More sites are being put up for collective sales, with more than S$1.5 billion worth of private property hitting the market yesterday.

The site with the biggest price tag is Faber Garden, going for around $830 million. Located along Upper Thomson Road, the 544,738 sq ft freehold site has a plot ratio of 1.6 and a potential gross floor area of up to 958,748 sq ft, including 10 per cent balcony space. It can potentially yield 760 units with an average size of 1,200 sq ft. An estimated development charge of about S$31.2 million is payable. 

Given the freehold tenure of Faber Garden, the site would command a premium relative to the 99-year leasehold tenure of Thomson Grand, and the indicative price works out to be in excess of S$830 million.

Separately, Dunearn Gardens in Dunearn Road has been put up for sale with an indicative price of S$550 million to S$561 million. The freehold property has a land area of about 95,442 sq ft and a plot ratio of 2.8. With 10 per cent balcony space added to the proposed development, the price is about S$2,050 to S$2,090 psf ppr.

Meanwhile, the nearby Newton Lodge in Newton Road has been put up for sale with an indicative price of S$40 million. The freehold site has an area of approximately 21,409 sq ft and a plot ratio of 1.4. A development charge of about S$2.5 million is payable. 

In Spottiswoode Park, the freehold Dragon Mansion has been put up for sale with an indicative price of S$132 million to S$142 million, or S$1,200 to S$1,290 psf ppr. The redevelopment site consists of two plots of land - Dragon Mansion and a substation - with a total area of 39,176 sq ft and a maximum gross plot ratio of 2.8.

Source: TODAY – 18 October 2011

Locals form over 80% of private home buyers, foreign ownership

The number of foreigners owning private property in Singapore has grown to 16 per cent in the first half of this year, compared to 12 per cent for the whole of last year.

Despite the growing demand from foreigners, Mr Khaw said locals still account for more than four-fifths of all private home purchases this year.

While the private housing market is still rising, the rates of price increase have been trending down since the third quarter of 2009.

So far this year, the price increase was 6 per cent, compared to the 18 per cent rise for the whole of 2010.

For successful Singaporeans who aspire to own private properties, Mr Khaw said the government will ensure an adequate supply of land for such developments.

Mr Khaw said: "In response to strong demand, we have ramped up supply of land through the Government Land Sales programme. This year, we are releasing land for over 14,500 units to the market, compared to 10,000 units last year. 

Today
, there are still 34,000 unsold private housing units, equivalent to more than two years of demand. We will keep up the land sales programme until the market stabilises fully. The new supply will take time to come on stream, but over time it will help stabilise our private property market."

Mr Khaw stressed that rising property prices cannot be attributed solely to foreign purchases.

He pointed to other factors such as low interest rates and Singapore's strong economic fundamentals.

Source: Channel NewsAsia – 20 October 2011

Unregistered property agent charged

A second person was charged on Thursday with representing himself as a property agent without being registered with the Council for Estate Agencies (CEA).

30-year-old Raymond Sim Soon Leong was also charged with failing to obtain a written authorisation from a licensed real estate firm before practising.

Despite being unregistered and unauthorised, CEA said in a media release that Sim had advertised two HDB flats for rental on an online property portal describing himself as a sales director with a licensed estate agent.
CEA said he also represented clients in making offers, negotiated property transactions and conducted flat viewings.

Sim was exposed when his prospective clients checked the CEA's Public Register of Estate Agents and Salespersons, and reported him to the council.

For each of his offences, Sim could be fined up to S$25,000 or jailed for a year, or both.

Since January 1 this year, all property agents must register with the CEA and possess written agreements with their companies before they are allowed to perform their job. Failure to comply with these rules is an offence.

Source : Channel NewsAsia – 20 Oct 2011

En bloc sale wave unlikely sign of rebound in market

Singapore is suddenly awash with properties up for enbloc sale.
A last splurge for developers for 2011, and possibly the last before the market cools – that's what some owners of en bloc properties are hoping for.

But, far from a resurgence, experts have dismissed any notion that the sudden rash of sales indicates a rebound in the market.

 It is certainly not a resurgence of overall activity… It's probably a coincidence that there are several en blocs launching or relaunching their tenders.

In fact, higher stamp duty on sales has reduced the profit potential for some investors.

The recent new launches have not just achieved new high prices but also sold well at a very fast pace, so this has caused the developers to replenish their land bank and for freehold land which can only be replenish through the en bloc market.

Growth in the en bloc property market is slowing down. And unless the bigger properties find their unique selling point and maintain realistic expectations, chances of a successful sale will be pretty low.

Global economic uncertainty has played a big role in clouding the outlook, with credit from banks harder to come by for the residential market.

En bloc sales in the third quarter almost halved from the previous three months to S$580 million, with larger properties valued at over S$300 million meeting repeated failures.

The new crop of en bloc projects may not find buyers for another year, and with so many up for grabs, developers' money may be thinly divided.

Source : Channel NewsAsia – 19 Oct 2011

Fine-tuning of housing policies called for

The MP for Holland Bukit Timah GRC, Christopher De Souza said that though housing policies need fine-tuning, the foundation of these policies are still sturdy.

 “BTO flats do not solve the immediate housing problem, because it takes up to three years before the new flat owners get their keys. In the meantime, many are still without a home of their own,” said Mr Giam during his speech in Parliament.

Also speaking on the housing issue, MP for Nee Soon GRC, Dr Lim Wee Kiak called on HDB to return back to its basics, with home ownership as the main mission.

In addition to reviewing the pricing policy of new HDB flats, he also had these suggestions.

“No. 1, disallow HDB flat upgraders to private property from retaining their flats for rental, which means they have to sell. No. 2, impose additional tax conditions on PRs who have invested in HDB flats for rental or for capital gain. No. 3, increase HDB housing grant to low income families, but at the same time, extend the minimum occupancy period to prevent premature cashing out,” said Dr Lim.

On helping low-income Singaporeans plan for their retirement, Dr Lim suggested forming a common pool of pension funds apart from CPF, where everyone contributes according to their income level and is disbursed equally to all retiring Singaporeans.

Source : Channel NewsAsia – 18 Oct 2011

National Development Minister Khaw to focus on first-timers and vulnerable families

Mr Khaw Boon Wan has outlined his priorities for the first two years of his term as the National Development Minister.

In his first speech on housing issues in Parliament on Wednesday, he said he will focus on the newlywed HDB first-timers and vulnerable families.

Mr Khaw said he is committed to help all newlywed first-timers earning below S$10,000 per month get their first HDB home as soon as possible.

In the past two years, home prices shot up by 30 per cent in the HDB resale market, and 50 per cent in the private housing market, driven by global liquidity overflows and an imbalance in housing supply and demand in the domestic market.

The government is building 50,000 HDB flats in the first two years. This is the equivalent of a new Ang Mo Kio Town.

If demand remains strong beyond 2012, Mr Khaw said there are resources and capacity to build more than 100,000 HDB flats during the current term of government. This may include starting Build-To-Order (BTO) project launches in the proposed Bidadari estate, which can potentially house up to 12,000 units.

Planning for a new HDB town in Tengah will also start. The new town could have 56,000 HDB units when fully developed.

While no BTO projects will be launched in Tengah during this term of government, Mr Khaw said the infrastructure like earthworks, roads, drains, sewers, and other facilities will be put in.

Mr Khaw said as long as construction costs do not rise dramatically, the BTO prices will stabilise.

And for families with household incomes of below S$1,500 per month, the government will ramp up the supply of rental flats. This includes opening the disused workers’ quarters at the former Tanjong Pagar train station.

It is estimated that there are about 16,000 first-timer families still waiting to buy a new HDB flat, and each year brings in 15,000 new applicants.

Currently only five per cent of BTO flats are kept for second-timers, even though they make up 40 per cent of BTO applicants.

By reducing the demand on the HDB resale market, resale prices should begin to moderate, benefiting other home buyers, like the singles.

As for calls by some industry players to remove the recent cooling measures for the property market, Mr Khaw said it is not quite time yet. That is because of the global economic uncertainties. He said the government will continue to monitor the market and make additional tweaks when necessary.

Source: Business Times – 19 October 2011

CEA clamps down on errant estate agencies & agents

The authorities are getting tougher on errant estate agencies and agents.

Industry watchdog, the Council for Estate Agencies (CEA) has formed an Inspection and Compliance Section – aimed at detecting infringements and unethical behaviours.

Executive director of CEA, Chionh Chye Khye said: “Staff will carry out inspection and compliance checks to ensure that estate agents have in place proper systems for management and supervision of salepersons, complaint handling, advertisement control and maintenance of proper records.”

Being a customer-oriented industry, Mr Chionh said estate agencies should treat all complaints as customer feedback and strive to improve their frontline services.

A nation-wide survey was announced at the seminar Tuesday morning.

The survey is to gauge public perception of the real estate agency industry.

It will cover four areas, including consumer satisfaction and expectations.

Source : Channel NewsAsia – 18 Oct 2011

New home sales soar, despite global uncertainty

New home sales in Singapore surged last month despite global macroeconomic uncertainties and stock market volatility, driven by strong demand in mass market condominiums from HDB upgraders.
Urban Redevelopment Authority (URA) data released yesterday showed developers sold 1,631 private homes last month, up 20.7 per cent from the 1,351 units in August. A total of 1,321 units were sold in the outlying areas, 260 in the city fringes and only 50 in the prime districts.

Including Executive Condominiums (ECs), September sales hit 2,064 units. This is the highest monthly volume this year and a strong 26 per cent jump from August's 1,638 units.

September's results were remarkable and largely contributed by the sale of A Treasure Trove closing 683 units, making up 42 per cent of the total transactions. These homebuyers are mainly HDB upgraders and the purchase rationale was the attractive pricing, with median price of S$915psf in this development, and its proximity to the Punggol MRT.

The number of private homes, excluding ECs, launched last month rose 39.1 per cent from the previous month to 1,919 units - and 1,504 of these, or 78.4 per cent, were in the OCR.

A total of 433 EC units were sold last month, up from 290 in August, it was likely that the latest Government move to raise the household income ceiling for EC buyers from S$10,000 to S$12,000 per month had given a boost to sales.

For the rest of the year, developers would be monitoring the impact of the euro zone crisis on the Singapore economy to time their project launches.

Looking at launch-ready projects in Q4 and with prices remaining stable, it is unlikely that there will be the same level of take-up as in Q2 and Q3. Total new home sales volume in 2011 is expected to exceed the 14,688 units sold in 2009, but it remains to be seen whether it can outdo the record 16,292 units sold in 2010.

Land for 1,900 more homes to go on sale.

To meet persistent housing demand, the Urban Redevelopment Authority (URA) and the Housing and Development Board (HDB) will be selling four sites this month that can yield about 1,900 homes, adding to the 13,825 units that have been launched under the Government Land Sales (GLS) Programme this year.
The first of the four sites, in Alexandra Road near the Redhill MRT, was launched yesterday under the Confirmed List of the GLS.

Based on a plot ratio of 4.9, the roughly one-hectare site can produce a maximum gross floor area of 48,768 sq m, or 540 to 580 housing units.

The Alexandra Road site is one of the more attractive sites on the current GLS programme. The tender could attract about 15 to 20 bids, with the top bids likely to be submitted by major developers with deep pockets and holding power because if the winning developer plans to sell the units in this project at prices above $1,350 psf in the near future, it could need more than a year to sell all the units.
Based on analysis, this site can be expected to fetch a winning bid of about S$305 million to S$341 million, or S$581 to S$650 psf per plot ratio.

The other three sites will be released on Oct 27 and can potentially yield another 1,345 housing units.

Source: TODAY – 18 October 2011