SINGAPORE : Market watchers are not surprised by the government’s move on Monday to cool the housing market, and some even said that it’s long over due.

On average, analysts expect the latest measures to dampen private home sales by about 20 per cent for the rest of the year.

And developers may also hold back on new launches, and turn to preview sales instead.

The relaxation of some housing policies will make Design, Build and Sell Scheme (DBSS) flats more accessible to Singaporeans who belong to the ‘sandwiched class’ income group, earning between S$8,000 and S$10,000 and previously did not qualify to use CPF housing grants for them.

And observers said that could shrink the pool of buyers upgrading from public housing to a private property, causing demand for private homes to soften.

This group of buyers has been snapping up mass market private homes in the past year and fuelling price increases in the segment.

Donald Han, regional MD of Cushman & Wakefield said: “I think mass market has come up if you’re looking at the first quarter of 2008, prices have gone up by 6-7 per cent. We probably will not expect prices to come down in the next two to three quarters, but we probably expect more stabilisation in values. After all, the market needs to take a breather.

“And if we can contain the leap, in terms of price increases of HDB flats, I think it will put a lid on the price increases, in terms of the mass market as well.”

Analysts also expect developers to be less aggressive in their bids for state land.

Meanwhile, the Real Estate Developers Association of Singapore (REDAS) said the latest measures may make property less affordable upfront.

But it is confident the property market will create value for home-owners and investors in the long term.

Overall, prices are expected to moderate with the slew of cooling measures.

But experts are not ruling out further intervention from the government, citing concern over the huge amount of liquidity in the market and the low interest rates.

Colin Tan, director of Research & Consultancy at Chesterton Suntec International said: “The previous measures were largely symbolic, and it didn’t quite address the liquidity problem. Right now, you have loan to value ratio of 70 per cent, and you have a minimum cash payment of up to 10 per cent, so that will at least soak up some of the liquidity.

“If this set of measures don’t work in terms of restraining prices, we can possibly expect more measures. Going forward with what the government has mentioned – that prices have increased 11 per cent for the first half of the year – we know that a 11 per cent rise is unacceptable. So at least we now know it should be lower, much lower than 11 per cent, maybe 10 per cent for the whole year.

According Leong Waiho, senior regional economist at Barclays Capital, price levels have now exceeded the historical peak in Q2 1996.

Average private residential prices are up 38 per cent, compared with the trough in the same quarter in 2009. This also outstrips the growth in rental yields of 9.2 per cent on-year.

For the second half of the year, analysts expect private home prices to grow by up to 6 per cent.

Source: Channel News Asia, 30 Aug 2010

SINGAPORE : Market watchers said the new rules requiring private property owners to sell their homes within six months of buying an HDB flat will go some way in cooling the red-hot resale market.

New rules on second home loans may also moderate demand somewhat.

Some analysts expect the rules restricting dual home ownership to have an “almost immediate” impact on resale demand.

Chris Koh, director of Dennis Wee Group said: “Those who’ve dreamed of owning a HDB flat and a private at the same time now have to think harder. I would expect this will probably dampen prices a little.

“HDB owners who are hoping to find private property owners to buy their HDB flats and are willing to pay premiums, will no longer have that option. So those who buy flats today really buy it for owner occupation, which primarily is the function of public housing.”

The new rules kick in on August 30, and some analysts estimate that about 10 per cent of such transactions will be affected.

HDB said those who have only recently submitted their applications to buy an HDB flat may be granted exemptions on a case-by-case basis.

But there will be no such leeway for buyers looking to finance their second home, be it private or HDB, with a bank.

Under new rules, they will have to cough up a larger cash payment – from 5 per cent previously, to 10 per cent.

And those with an outstanding loan can only get a bank loan of up to 70 per cent of the property’s value, instead of the previous 80 per cent.

The idea is to prevent people from being overstretched by servicing two loans.

But those looking to buy a second home using a bank loan, may find themselves in a sticky situation. This is because a sales transaction takes a few months to complete and if you’re in the midst of selling your home which has an outstanding loan, the higher cash requirements apply.

So one way around it is to complete the sale of your first property before buying your second, but this means you’ll need to find a place to live in the meantime.

Koh suggested that an alternative is to take up a bridging loan from the bank to finance any cash or loan shortfall, should one buy first before selling.

Other industry watchers welcomed the wider options for the “sandwiched class” – so-called because their incomes are too high for most new HDB projects, but are too low for private condominiums.

They can now buy flats under the Design, Build and Sell Scheme (DBSS) and analysts expect some demand to move away from the resale market.

Some observers said the move will pile on more demand for DBSS projects, which tend to see strong take-up rates.

“From previous launches you can see that practically all DBSS projects are sold out, except for units leftover primarily because of the Ethnic Integration Ratios that have been exceeded. So by and large, most of the DBSS projects are all well taken up, and this was before including this ‘sandwiched class’,” said Eugene Lim, director of ERA Asia Pacific

According to HDB, two DBSS projects launched this year – The Peak in Toa Payoh and Parc Lumiere at Simei, with over 1,500 units in total – 90 per cent were sold out as of end-May.

HDB is looking to shorten waiting times for new flats from three years to two and a half years.

But some buyers said they may still stick to buying resale.

“Two and a half years is not my concern. The problem is I’m not guaranteed. For instance, I’m waiting for the balloting, and it ends up that I may not get what I want after the balloting result is released,” said home-buyer Ang See Ngee.

Overall, analysts said the new rules will help to ensure that resale demand is based on real demand.

Source: Channel News Asia, 30 Aug 2010

1 The Government announced today the following measures to maintain a stable and sustainable property market:

Increase the holding period for imposition of Seller’s Stamp Duty (SSD) from the current one year to three years.

For property buyers who already have one or more outstanding housing loans1 at the time of the new housing purchase:

Increase the minimum cash payment from 5% to 10% of the valuation limit2; and

Decrease the Loan-to-Value (LTV) limit for housing loans granted by financial institutions regulated by MAS to these buyers from the current 80% to 70%.

The measures will take immediate effect on 30 August 2010.

2 The Government’s objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals. The property market is currently very buoyant. While the rate of price increase of private residential properties has moderated in the last 3 quarters, prices have still increased significantly by 11% in the first half of 2010, and price levels have now exceeded the historical peak in the second quarter of 1996.

3 While Singapore has enjoyed strong economic growth in the first half of 2010, our economic growth is expected to moderate in the second half of the year. There are also still uncertainties in the global economy. Should economic growth falter and the market corrects, property buyers could face capital losses, with implications on their own finances and the economy as a whole. Moreover, the current low global interest rate environment will not continue indefinitely, and higher interest rates could have severe implications for buyers who have overextended themselves. Therefore, the Government has decided to introduce additional measures now to temper sentiments and encourage greater financial prudence among property purchasers.

Extending the Holding Period for Imposition of Seller’s Stamp Duty (SSD) on Residential Properties Sold from 1 Year to 3 Years

4 The Government imposed in February 2010 a seller’s stamp duty (SSD) for sellers who buy residential properties3 on or after 20 February 2010 and sell them within a year of purchase.

5 For residential properties bought4 on or after 30 August 2010, SSD will be imposed if these properties are sold within three years of purchase. Specifically, the SSD levied on residential properties will be revised to as follows:

Sold within the first year of purchase, i.e. the property is held for 1 year or less from its purchase date – The full SSD rate (1% for the first $180,000 of the consideration, 2% for the next $180,000, and 3% for the balance) will be imposed.

Sold within the second year of purchase, i.e. the property is held for more than 1 year and up to 2 years – 2/3 of the full SSD rate.

Sold within the third year of purchase, i.e. the property is held for more than 2 years and up to 3 years – 1/3 of the full SSD rate.

No SSD will be payable by the vendor if the property is sold more than 3 years after it was bought. Please see Annex for examples of how the SSD will be computed.

6 The extended SSD will not affect HDB lessees as the required Minimum Occupation Period for HDB flats is at least 3 years.

7 IRAS will be releasing an updated e-tax guide on the circumstances under which SSD will apply and the procedures for paying SSD. The e-tax guide will be available at www.iras.gov.sg. Taxpayers with enquiries may call IRAS at 6351 3697 or 6351 3698.

Increase the Minimum Cash Payment from 5% to 10% of the Valuation Limit for Property Purchasers with one or more outstanding Housing Loans

8 Previously, property buyers have to make cash payment of at least 5% of the valuation limit5. With effect from 30 Aug 20106, the cash payment is increased from 5% to 10% of the valuation limit7. This measure is applied only to buyers of private residential properties, Executive Condominiums, HUDC flats and HDB flats (including those under the Design, Build and Sell Scheme, or DBSS flats) who are taking housing loans from financial institutions regulated by MAS and who already have one or more outstanding housing loans at the time of applying for a housing loan for the new property purchase.

Decrease the LTV limit for housing loans granted by financial institutions regulated by MAS from the current 80% to 70% for Property Purchasers with one or more outstanding Housing Loans

9 The LTV limit is lowered from 80% to 70% with effect from 30 Aug 20108 for borrowers who have one or more outstanding housing loans (whether from HDB or a financial institution regulated by MAS) at the time of applying for a housing loan for the new property purchase. Borrowers who do not have any outstanding housing loans continue to have an LTV cap of 80%. These rules apply to housing loans granted by financial institutions for private residential properties, Executive Condominiums, HUDC flats and HDB flats (including DBSS flats).

10 Loans granted by HDB for HDB flats (including DBSS flats) will still have an LTV cap of 90%. HDB loans are offered to eligible first-time flat buyers and second-timers who are right-sizing their flats to meet their housing needs. They are required to utilise all of their CPF Ordinary Account balance before HDB loans will be granted. Furthermore, those taking a second concessionary HDB loan must use the CPF refund and 50% of the cash proceeds from the sale of their previous flat before they are granted an HDB loan. This is in line with HDB’s home ownership policy of helping eligible buyers, especially first-time buyers, purchase public housing in a financially prudent manner.

11 Financial institutions’ lending standards have remained prudent and the asset quality of housing loans has stayed robust, with the non-performing loans ratio at less than 1% as at Q2 2010. Nonetheless, there are signs that more housing loans are originating at higher LTV bands of above 70%. In line with the objective of ensuring a stable and sustainable property market, lowering the LTV limit sends a clear signal to financial institutions to maintain credit standards, and encourages greater financial prudence among property purchasers already servicing one or more outstanding housing loans.

Adequate Supply in the Pipeline

12 The Government will also continue to ensure that there is adequate supply of housing to meet demand. In the second half 2010 GLS Programme, we have made available sites that can yield about 13,900 private housing units, of which about 8,100 units will be from sites on the Confirmed List. This is the highest potential supply quantum in the history of the GLS Programme. We will inject an even larger supply of private housing in the first half 2011 GLS Programme, if demand continues to be strong.

13 Apart from the supply from the GLS Programme, there are also 61,800 uncompleted units of private housing from projects in the pipeline as at 2Q20109. Of these, 32,600 units were available or could be made available for sale. These comprised units that had been launched for sale by developers, units that had pre-requisite conditions for sale10 and which could be launched for sale immediately, as well as units with planning approvals for which pre-requisite conditions for sale could be obtained quickly from the Government and made available for sale11.

14 The Government will continue to monitor the property market closely and will introduce additional measures if required later, to promote a stable and sustainable property market.

*****

1 Financial institutions are required to conduct checks with HDB and with one or more credit bureaus on whether the buyer has an outstanding housing loan at the time of applying for a housing loan for the new property purchase. For joint buyers, if either buyer has an outstanding housing loan, the joint buyers will be considered as having an outstanding housing loan.

2 This is in addition to the cash over valuation amount that has to be paid in cash.

3 The SSD will apply to the transfer or disposal of interest (including sale and gifts) of residential lands and residential units (whether completed or uncompleted).

4 The date of purchase for computation of the holding period for SSD shall be the date when a buyer (i.e. Buyer A) exercises the option to purchase the property, or signs the sale and purchase agreement, whichever is earlier. The date of resale of the property shall be the date when the subsequent buyer (i.e. Buyer B) exercises the option to purchase the property from Buyer A, or signs the sale and purchase agreement, whichever is earlier.

5 The amount of CPF monies plus housing loan taken for the purchase of the property cannot exceed 95% of the valuation limit (defined as the lower of property value or property price).

6 The 10% minimum cash payment will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 30 August 2010; or if there is no OTP, where the date of the sale and purchase agreement falls on or after 30 August 2010.

7 Therefore, the amount of CPF monies plus housing loan that can be used for the purchase of the property will be reduced from 95% to 90%.

8 The 70% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 30 August 2010; or if there is no OTP, where the date of the sale and purchase agreement falls on or after 30 August 2010.

9 These refer to new development and redevelopment projects with planning approvals, i.e. either a Provisional Permission (PP) or Written Permission (WP).

10 These refer to private residential developments with Housing Developer Licence and Building Plan Approval. Under the Housing Developer (Control and Licensing) Act, a sale licence must be obtained for a project with more than 4 units, if the developer intends to sell uncompleted residential units in the development. However, the sale of the residential units can only commence with the approval of the building plans of the development.

11 These refer to uncompleted private residential developments without pre-requisites for sale but with WP or PP granted. The sale licences could be obtained within 5 working days and building plan approvals could be obtained within 7 working days from the date of application for cases where clearances from various technical agencies are obtained and relevant documents are in order during formal submissions.

Issued by: Ministry of National Development, Ministry of Finance and Monetary Authority of Singapore
Date: 30 August 2010

Host of projects to come on stream when Hungry Ghost Festival ends, but affordability is still key

The market for new property launches has slowed this month but should see a rebound after the Hungry Ghost Festival ends on Sept 7.

Developers are already lining up projects for launch, and these choices are expected to range from mass-market homes to high-end ones.

Next month, Hoi Hup Sunway is targeting to launch the 473-unit Vacanza@East – a freehold project in Lengkong Tujoh in the east, near the Pan-Island Expressway.

Hoi Hup said the joint venture bought the vacant freehold site for the project late last year. The condo will have one- to four-bedders from as small as just under 500 sq ft. Prices will start from more than $500,000, sources said.

City Developments and Hong Realty’s 642-unit NV Residences in Pasir Ris Grove is also likely to be pushed out next month.

Marketing material shows that the 99-year leasehold condo has one- to four-bedroom units as well as penthouses, with the smallest one-bedders also just under 500 sq ft in size. The material says prices for the two-bedders will start from more than $600,000.

Around the same time, Chip Eng Seng’s Oasis@Elias in Pasir Ris is likely to be relaunched at higher prices. The condo had sold for an average of $670 per sq ft in July last year, though its price has since risen to about $740 psf.

Property experts say rising prices have forced buyers to pay more for a private home. But affordability remains the key.

A report by property consultancy DTZ last week said those with public housing addresses are increasingly buying private homes that cost more than $1 million.

Some 43 per cent of buyers with HDB addresses bought homes costing more than $1 million in the second quarter, up from 36 per cent in the first quarter, it said.

This is due to prices having risen almost 20 per cent since the third quarter of last year.

‘There is a chance new mass-market projects may be launched at higher psf prices,’ said Savills Residential director Phylicia Ang.

‘As long as developers keep the total price quantum affordable, there should be demand for these projects.’

Said Mr Peter Ow, managing director (residential services) at Knight Frank: ‘The pricing of mass-market projects is constrained by the target market’s income level.

‘So what developers do is to build smaller units across the board, from the two- to the four-bedroom units. Smaller units help to keep the total quantum price affordable,’ he said.

Unlike the previous 2007 boom which was led by the high-end sector, the current buying wave is mainly in the lower-end market segment – which is buoyed by rising public housing resale prices, DTZ said.

The high-end market is quiet given the global economic uncertainty, though a few developers may start launching such projects from next month. These could include Twin Peaks in Leonie Hill, The Peak@Cairnhill in Cairnhill Rise and Belle Vue Residences in Oxley Walk.

Belle Vue Residences was soft launched more than a year ago, and more than 100 of its 176 units have been sold. June caveats showed that three units were sold at $2,064 psf to $2,700 psf.

In the later part of next month, two projects in the mid-tier to high-end category can be expected, Knight Frank’s Mr Ow said.

There is the freehold 250-unit Cityscape at Farrer Park by IOI group and Kim Seng Heng Realty. It is likely to be launched at an average of $1,500 psf.

Amara Holdings is also looking to push out its 30-unit Killiney 118, which is within walking distance of Somerset MRT station. This freehold project is expected to go for more than $2,000 psf.

According to CBRE, two executive condominium launches may hit the market come October. These are the 573-unit Esparina Residences by Frasers Centrepoint and Lum Chang Building Contractors, and the 406-unit The Canopy by China-based MCC Land.

Looking ahead, experts expect buying activity in the mass- to mid-market segment to continue, though it is expected to be more selective due to the higher prices.

‘Although prices of mass-market homes are peakish, take-up could still be healthy due to the strength of underlying demand for them, if developers do not try to push the price border further,’ said Colliers International director of research and advisory Tay Huey Ying.

Source: Sunday Times, 29 Aug 2010

Experts sceptical as global data doesn’t compare across same property types

PRIVATE home prices in Singapore rose at the fastest pace in the world in the year to June 30, according to the latest quarterly report by online property research house Global Property Guide.

It says home prices here rose 34 per cent in that period – registering the highest year-on-year rise since 1995. This put the Republic well ahead of Hong Kong, in the No. 2 spot, with a 21.42 per cent jump. These figures have been adjusted for inflation.

Mr Matthew Montagu-Pollock, publisher of Global Property Guide, said: ‘It’s because of Singapore’s amazing economic growth… Housing markets respond to economic growth because people have more money in their pockets. They respond to interest rates and they respond to momentum.’

Global Property Guide compiles the ranking using data from 36 countries and territories – mostly official data that can be based on a particular housing type or a combination of housing types. In Singapore, it uses Urban Redevelopment Authority data, which covers only private homes.

Industry sources were sceptical about the ranking, given that it does not compare the same property types, for instance.

‘For the ranking to be useful, you have to compare like for like. In Singapore, you’re talking about the top 20 per cent of the housing market whereas another country might not have public housing,’ said an industry source, declining to be named.

‘But it’s possible that Singapore is among the top few when it comes to property price increases. It has strong growth fundamentals, the Government is stable, the property market is transparent and well-regulated and there’s no capital gains tax. It also has an open policy to attract talent.’

Said real estate firm Jones Lang LaSalle’s research head for South-east Asia, Dr Chua Yang Liang: ‘Based on anecdotal evidence, Hong Kong property prices seemed to have exceeded those in Singapore in the first half of the year.’

Knight Frank has an annual prime international residential index, which tracks global luxury residential prices by city. Last year, it shows that Shanghai had the steepest rise of 52 per cent, followed by Beijing’s 47 per cent and Hong Kong’s 40.5 per cent. Singapore was fifth, up 17 per cent.

The Global Property Guide report shows that Ireland had the steepest price falls of those covered. The housing recovery in Europe is patchy while North America is recovering at a snail’s pace and may see falling home sales.

The report said Asia’s strong economic growth, low interest rates and rising foreign demand fuelled skyrocketing house prices in Singapore, Hong Kong, Taiwan and mainland China. And these governments have responded by implementing anti-bubble measures.

Mr Montagu-Pollock was downbeat overall. ‘…most markets are not worth buying right now. We think in general, it will last quite a long time. Both Singapore and Hong Kong are interesting. We keep saying don’t buy in these (areas) because the gross rental yield is low. And the prices keep going up.’

He added: ‘The world has got to push housing prices down. The great conundrum is how to push them down without pushing the economy down.’

Source: Straits Times, 28 Aug 2010

MORE than 80 per cent of the 144 residential units in Oxley Holdings’ Viva Vista were snapped up during the project’s preview yesterday – indicating that there is still strong demand for small, or shoebox, apartments.

The sizes of the units in the project along South Buona Vista Road range from 323 sq ft to 1,076 sq ft, with the bulk being just shy of 400 sq ft.

Oxley Holdings said that the average transacted price was $1,450 per square foot (psf) while the absolute price started from about $520,000.

The project also has more than 100 commercial units which are yet to be sold.

Market watchers said that affordable and shoebox units continue to be popular with buyers, which could have prompted Oxley to go ahead with the launch of Viva Vista even as most developers hold back their sales activity this month – the seventh month in the lunar calendar.

Last month, 400 out of 468 units were sold in Hong Leong Group’s The Scala, accounting for a quarter of July’s total sales volume.

Analysts cited the project’s affordable pricing tagged to its mainly small units (around $985,000 for a 839-sq-ft two-bedroom unit) as one of the reasons behind the good showing.

The popularity of shoebox units first spiked in 2009. A study by property consultancy CB Richard Ellis in October 2009 showed that small apartments have become more common.

The firm looked at caveats lodged between January and September 2009 and found that 412 new non-landed residential units measuring 500 sq ft or less had been sold – 38 per cent more than the 299 sold in the whole of 2008.

In 2006 and 2007, 171 and 275 such apartments were sold respectively.

Source: Business Times, 24 Aug 2010

THE opening of MRT stations along the Downtown Line in Phase 2, which connects Bukit Panjang to Rochor, would result in property prices surging – especially in areas on the outskirts of Singapore, said property agents.

Seven out of 10 property agents my paper spoke to said that the cash-over-valuation (COV) amount for Housing Board flats in Bukit Panjang has increased by at least 10 per cent in the past year, with its MRT station slated to open in 2015. Estate agent Jenny Lee, 33, said COVs have almost doubled in the past year, from $25,000 – an amount similar to those of flats in nearby areas such as Choa Chu Kang – to its current $40,000.

The highest COV request she has recently seen for the area was a staggering $120,000, for a five-room flat.

She said: “Bukit Panjang used to be an area that we would encourage people with a lower budget to consider, as prices were relatively cheaper.

“People used to think it’s out of the way. It has become a hot spot now, with the upcoming MRT station.”

Another property agent, Mr Timothy Goh, 47, said that owners now expect a COV of at least $30,000 and are more insistent on getting it.

He explained: “It is harder to negotiate for a lower COV as owners know that the value of their apartments is going to rise. They are not in a hurry to sell the place.

In fact, some are playing a waiting game up even more.” Mrs Ng Siew Chai, 47, who owns an HDB flat located five minutes’ walk from the upcoming Bukit Panjang MRT station, said she has been receiving flyers from property agents wanting to help sell her home.

She has turned down all of them, and plans to wait for a few more years. “I have no plans to sell the flat but I’ll definitely monitor the market. If the price goes high enough, who knows?” she said.

Prices for properties that will soon have an MRT station nearby have generally gone up, with the most significant hikes found in areas that were previously considered inaccessible to those who rely on public transport, said property agent Sylvia Teo, 37.

For example, she has not noticed an increase in clients asking for private property in places such as Cashew and Hillview, even though the Downtown Line will pass through the vicinity.

In contrast, the Bukit Panjang HDB estate is now a boom town for property agents, buyers and sellers. Madam Teo said she now gets more than 20 clients a month asking for apartments in the area, compared to about five a month in the past.

She added that residents in nearby Bukit Timah usually own cars and do not benefit as much from the construction of a new MRT line. Those eyeing properties in Bukit Panjang are mostly after HDB homes and rely more heavily on public transport, she said.

“That’s probably why those with foresight will try to purchase a property in this ‘up-and-coming’ area, before more people swoop in,” she said.

Source: my paper, 23 Aug 2010

Buyer interest falls, but effect is temporary, say property experts
The floodwaters may have long receded, but property agents report that homeowners in flood-affected areas are facing reduced buyer interest.

Industry players say that property bargain hunters, however, might see the floods as a bargaining chip and an opportunity to invest should they chance upon an urgent seller.

They say that the floods are expected to be a temporary problem with drainage improvement works and flood prevention measures slated to be carried out by the Government, after which prices would resume their upward trend.

A number of condominiums in property hot spots, such as the Tessarina and Gentle Reflections in Bukit Timah, had their carparks flooded during heavy rain over the past two months, damaging parked cars and angering residents.

Landed home residents in Opera Estate and Jalan Ma’mor in Balestier woke up to muddy water gushing through their homes on a Saturday morning last month after a storm with nearly twice the force of the two in June battered the central and eastern parts of Singapore.

Managing director of property agency AC MacGyver, Mr Alexs Chua, said homes located in flood-prone areas might need to be priced at an estimated 15 per cent discount compared to those on higher ground.

‘It is hard to compensate a buyer who may have to change his furniture whenever it floods,’ he said.

Mr Steven Tan, executive director of residential at the OrangeTee agency, said that flood areas were likely to face price resistance in the short term.

‘Prices might not necessarily go down, but they might not move as quickly upwards compared to other projects in the area if the problem persists or if buyers remain wary,’ he said.

Property agents say that homes in popular areas such as Bukit Timah, Upper Thomson and Telok Kurau are being viewed by reluctant buyers who have lost some interest in projects devastated by the floods. Some sellers are more willing to negotiate on their asking prices.

Fire sale prices, however, are unlikely, agents say, since most sellers are not urgently divesting. But with buyers having more bargaining power now, they may be able to tease out small discounts from more flexible sellers.

PropNex chief executive Mohamed Ismail said: ‘No seller is going to sell a house at a 20 per cent discount just because of the floods, especially when they know the problem is not expected to be a permanent one.’

Knight Frank agent Mindy Yong, who markets the Tessarina condo in Wilby Road, said sellers may be open to offers $20,000 to $50,000 below their asking price.

A property agent who wanted to be known only as Mr Tay said that the current gap in price expectations between buyers and sellers in previously flooded areas has kept the market quiet since the floods.

‘Some buyers expected a fire sale and asked for a 20 per cent discount. Of course, sellers refused. But if they ask for a more reasonable 5 per cent discount, then why not?’ he said.

Mr Tay added that if no transactions were sealed in the next few months, it was inevitable that some sellers might become desperate and start lowering their selling prices.

However, prices are not expected to stay flat in the long term with the PUB already announcing plans to alleviate flooding in these hot spots, some experts say.

Singapore’s water agency said that works will include raising roads as well as widening and deepening drains. Where possible, the works will be expedited.

For example, improvement works in areas like Jalan Ma’mor and Jalan Bahagia will see water flow diverted to Sungei Whampoa and the drains deepened. Tenders for improvement works have also been called last month for the stretch of Bukit Timah Canal between Wilby Road and Maple Avenue.

Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said landlords rather than owner-occupiers are more likely to sell their flood-prone homes as they may decide to reinvest.

While potential gains will be affected, the market is still moving upwards, he said, adding that over the long term, most buyers may forget about the floods.

Source: Sunday Times, 22 Aug 2010

A day after more details of the Downtown Line were announced, observers are already predicting a hike in property prices in those areas.

Residents of Tampines and Bedok can expect five more stations serving their estates. And Jalan Besar will see a new station as well.

Homes around the Downtown Line linking Singapore Expo in the east to Bukit Panjang in the north-west are likely to see property prices shoot up.

Like many other train stations around Singapore, amenities like malls and shops will soon sprout around the area, serving residents and commuters.

One property expert estimates that HDB flat prices may rise between 5 and 15 per cent over the next seven years, while private condominiums could command a premium of about 10 to 20 per cent.

“Based on past experience, we foresee that the rise may break into two different phases – one is immediately after the announcement which may happen these few days; the other one could be just before the completion of the MRT station,” said Steven Tan, executive director of OrangeTee.

Cash-over-Valuation (COV) for HDB flats could also go up.

“For example, if the average COV is about $30,000 to $40,000, after the announcement, the COV may go up to $50,000 to $60,000 (for the HDB flat around the vicinity),” said Tan.

Existing stores are also looking forward to the new lines.

But they too worry about a spike in rentals.

“(There’ll) be more competition because (there’ll be) a bigger crowd, so business will be boom,” said one retailer at Tampines Central near Tampines MRT.

When completed, the Downtown Line will facilitate direct travel from the northwest and east of Singapore to the Central Business District (CBD) and Marina Bay.

The line is projected to see a daily ridership of more than half a million people when fully operational by 2017.

Source: Channel News Asia, 21 Aug 2010

In business strategy classes, we often learn that the most successful businesses are the ones that are early leaders in identifying a need or are able to create a market by convincing consumers to pay for something which they never knew they wanted.

In the last property boom, the race was to build the biggest and priciest apartment.

To achieve this, projects were co-branded by contracting renowned architects to produce distinctive products and stuffing the apartment with the best appliances.

CapitaLand and Sun Hung Kai engaged the services of renowned Benoy when developing The Orchard Residences. “Branded” apartments were introduced.

City Developments brought the St Regis brand to Singapore. Specialist luxury home developer SC Global took this to a new level by introducing 6,000-square-feet apartments at The Marq, which comes with your own 15m lap pool. These distinctive projects helped to inject life and interest into the luxury housing market and pushed the price boundaries in their respective segments.

Coming out of the economic recession last year, a turning point of sorts for the private residential market was the successful launch of The Alexis at Alexandra Road, jointly developed by Fission Group and Yi Kai Development.

Before its launch and rumoured sell out, my initial thoughts were that the site attributes were not fantastic. I could not imagine staying in a 400-sq-ft apartment and thought that occupants might get dizzy from facing the giant rotating Mercedes billboard across the road.

But as it turned out, the developer had astutely identified the need for affordable houses at the expense of size. The project was sold out at launch and at a price more than 20 per cent above that of “proper” apartments in the vicinity. The developer created a market for small apartments, which have since become a “must-have” in projects in order to maximise returns.

Then, early this year, Cheung Kong created another market via introducing “luxury housing in the suburbs”.

Before its launch, sceptics lamented about the noise and congestion caused by the long container trucks plying the West Coast Highway, the bad air in West Coast and even the sea view.

But the aptly named The Vision, a 99-year leasehold project, managed to shatter the price ceiling, selling at more than 20 to 30 per cent above existing condominium prices. More significantly, its successful launch helped lift prices of existing homes in the area, which had lagged the market.

Adding $100 to $200 per square feet to a price may not be so much of a stretch during periods of economic boom and positive sentiment.

Still, taking a unit of 1,000 sq ft, each $100 psf rise in price implies that the buyer needs to fork out $20,000 more in downpayment and an additional $316 per month in mortgage payments (at 2.5 per cent interest per annum and 30-year loan term).

With overall private property prices at an all-time peak now and a wider variety of choices, it becomes even more important to differentiate the product offering.

Which projects can inject that new element that could compel home buyers to part with their cheques and pay premium “future” prices for their dream homes? Could we see 99-year leasehold projects command $2,000 psf in the Holland area or $1,500 psf in Thomson or $1,300 psf in Jurong Lakeside? Could new launches at Yishun, Woodlands or Tampines burst the $1,000 psf mark?

Existing home owners should keep watch as they could benefit from gains in value, even on paper, if and when developers manage to push pricing boundaries.

For those thinking of buying but are not too inclined to pay “future prices”, they could consider taking up positions in localities where they feel developers have the gumption to push pricing boundaries.

By Tan Kok Keong, head of the Research and Consultancy Department at Orange Tee.

Source: Business Times, 20 Aug 2010