30 Jan Singapore Property News: 16th to 30th January 2015
Property Market Activities
Gloomy outlook for shoebox units as their numbers rise (ST, 29 January 2015)
The resale prices of shoebox flats rose 0.5 per cent in December after dipping 2 per cent in November but they were still well down over the course of the year, according to a new report recently. The outlook appears gloomy for small units given the high number of completions due in coming years, while leasing demand seems patchy. When the concept of shoebox units kicked off in 2009, they were mainly in the central region but by 2011 they were being incorporated into projects island-wide. The trend became so pronounced that the Urban Redevelopment Authority noted in September 2012 that as many as 50 per cent to 80 per cent of then – new projects outside the central area consisted of shoebox units. It is estimated that about 6,200 shoebox units will get their Temporary Occupation Permit over these two years.
Sibor rises as MAS eases monetary policy (ST, 29 January 2015)
Some mortgage repayments will hurt a little more after a benchmark interest rate here rose recently, as the central bank made a surprise move to tweak its exchange rate policy. The three-month Singapore Interbank Offered Rate (Sibor) is used to set many floating-rate home loans here. Banks add their margin to Sibor for these loans. The MAS unexpectedly announced recently that it would slow the appreciation of the Singapore dollar. MAS directly controls only the exchange rate and not interest rates here, but a weaker Singdollar can lead to capital outflows and cause interest rates to rise.
Tenants opt for shorter leases as rents slide (ST, 29 January 2015)
More tenants are opting for shorter leases in hopes of scoring a better deal as rentals continue to slide. Property agents and analysts said the trend started to pick up last year as the rental market started to soften. The rental index for private homes fell by 3 per cent for the whole of 2014, while that of public flats dropped by 2.1 per cent. The vacancy rate for private homes hit 7.8 per cent at the end of last year, the highest in nearly a decade. With a pipeline of more residential units to be completed in the next two years, the rental scene has become a “tenants’ market”, said experts.
Prices of private homes down 4% in 2014 (BT, 24 January 2015)
A government-engineered slowdown of the property market had led prices of private landed and non-landed homes to sag 4 per cent for the full year, with the fourth quarter down 1.1 per cent from the preceding quarter. Prices of landed homes fell 5.3 per cent over the course of last year as these properties become even less affordable given the lending curbs while prices of non-landed private homes slipped 3.5 per cent. At the same time, sales of private condos dived 44 per cent from 2013’s level to 12,723, of which 2,635 were sold in the last quarter. According to a property consultant, various headwinds are expected to keep a lid on home buying demand in 2015, namely a surge in new home completions, rising interest rates, and a lacklustre leasing market.
Vacancy rate for private homes at 10-year high (ST, 24 January 2015)
The vacancy rate for private homes is at its highest level in nearly 10 years – the result of rising completions and curbs on foreigners coming here to work, experts say. About 7.8 per cent, or 24,062 completed private residential units, were vacant at Dec 31 last year, according to figures released by the URA. According to a property analyst, the high vacancy rate is symptomatic of supply coming on stream faster than demand. Furthermore, the structure of demand has been changing: In the past 30 or 40 years, one expatriate could be mapped onto one apartment, however, one expatriate may now only be taking up a smaller apartment or a room in recent times. Rents are set to fall by up to 8 per cent this year, with the drop most pronounced in the central region as firms keep cutting back on housing allowances.
Price, rental rises recorded for office, retail sectors (BT, 24 January 2015)
Commercial properties offered some cheer against the backdrop of a bleak residential market, with office and retail segments registering price and rental increases last year. Data from URA released recently showed a 9.8 per cent climb in rents and a 4.5 per cent rise in prices for the office sector over the whole of 2014. For retail space, both rents and prices grew 0.9 per cent last year. But these segments are likely to take on divergent paths this year – with the office segment still posting growth in rents and prices, albeit at a slower pace, and the retail rents and prices heading south, property consultants say.
Geylang re-zoning may raise condo values (ST, 17 January 2015)
The proposal to re-zone some residential parts of Geylang for commercial use could lift the values of nearby condominiums. Property experts believe reducing the amount of space for homes will bolster values for existing residences as demand is strong, given the area’s prime location and good transport links. With future supply strapped, owners of existing apartments can expect better returns from their properties, both in terms of rental as well as capital values, according to a property analyst.
More renting out entire HDB flats as resale market
cools (ST, 26 January 2015)
More people are renting out their entire HDB flats amid a cooling resale market, with many upgrading to private housing. The number of subletting approvals last year jumped by about a fifth, from 30,074 in 2013 to an all-time high of 36,228 last year, HDB data. In the last quarter alone, 10,365 approvals were granted. There were also 48,120 fully sublet units at the end of last year – a 5.4 per cent increase from the 45,674 units at the end of 2013. An HDB spokesman told The Straits Times that flat owners’ “desire to monetise their flats” and “availability of alternative accommodation” are among factors influencing the rise in subletting approvals.
Prices of Q4 resale HDB flats down 1.5%, volume up 2.7% (BT, 24 January 2015)
Resale prices of Housing & Development Board (HDB) flats fell 1.5 per cent in Q4 2014 quarter-on-quarter, even as resale transactions of such flats rose 2.7 per cent, from 4,513 cases in Q3 to 4,635 cases in Q4. This brings the HDB resale prices down 6 per cent for the entire year of 2014, according to data released by the HDB. Despite the rise in resale volume in Q4, the number of resale transactions for the full year fell 4.3 per cent from 2013 to 17,318. In 2015, resale flat transactions are expected to recover slightly, but resale flat prices will fall by up to 4 per cent in the first six months of the year as more flats will be put up on the resale market as more private residential properties and executive condominiums are completed.
Government Land Sales
Oversupply of ECs ‘hits sales, land bids’ (ST, 26 January 2015)
An oversupply of executive condominium (EC) projects is hitting unit sales and driving down land bids, according to analysts. According to a research house, many new projects are in are as that already have an abundance of EC projects. Its research showed that 13 EC developments representing 7,149 units have been launched in Punggol and Sengkang since 2010, with about 5,700 sales. Recent launches in the area include The Amore and The Terrace, which sold about 70 (out of 378) and 150 (out of 737) units respectively since their December launch. A 1.75ha site in Anchorvale Crescent, Sengkang, was also the subject of a tender recently that attracted just three bids. Sim Lian Land’s top offer of $157.8 million, or $280 per sq ft (psf) per plot ratio (ppr), was the lowest since the Twin Waterfalls EC site in Punggol Field was sold 3 and 1/2 years ago at $270 psf ppr.