CHINESE buyers acquired more homes here than any other group of foreigners in the first three months of the year, bypassing Malaysians, the traditional leaders, in the process.

Mainland Chinese – including permanent residents (PRs) – snapped up 241 homes this quarter, according to caveats retrieved to March 30 by Jones Lang LaSalle (JLL). This comprised 8 per cent of all non-landed sales and 22 per cent of all purchases made by foreigners in the three months.

Experts say tighter home-buying policies in China, such as restrictions on residents in major cities buying a second or third home, have prompted more Chinese buyers to look further afield.

Mr Jack Teo, a GPS Alliance agent who recently sold a Bishan Loft unit to a Chinese PR, said he has received more inquiries from Chinese buyers looking for apartments.

‘There are a lot of Chinese immigrants here and their mindset is that renting is expensive and so they would rather buy,’ he said.

‘With the measures, they have the extra cash now and some parents might be looking for affordable homes of less than $1 million to buy for their kids studying here.’

The trend was already evident in the last quarter of last year, according to a DTZ Research report that found that Chinese buyers had overtaken Indonesians for the first time and were closing in on Malaysians.

The Malaysians were supplanted this year, with Indonesians in third place and Indians close behind.

Experts also note that Chinese buyers occupy two extreme ends of the market. The JLL analysis found Chinese buyers this quarter dominating both the mass-market segment and the ultra-posh sector of homes priced at $5 million or more.

They bought 151 mass-market units priced between $500,000 and $1.5 million, or 8 per cent of homes in the segment, JLL said. They were followed closely by Malaysians.

The firm defines mass-market as districts outside of the prime, central and east coast areas.

Chinese buyers also acquired 17 of the 54 units priced over $5 million sold to foreigners in the central and prime districts this quarter.

The rest were bought by buyers from Indonesia, Britain and Malaysia, among other nations.

Foreigners played a key role in the overall market this quarter, buying 32 per cent of the 3,090 non-landed homes sold, JLL added. This includes all new sale, subsale and resale transactions.

Experts say the increasing ranks of Chinese home buyers is no surprise given that Singapore provides a safe environment for cash-rich Chinese to acquire secure assets like property.

OrangeTee’s executive director of residential, Mr Steven Tan, said that after ‘drastic measures’ to restrict home purchases were introduced, the Chinese were eager to invest abroad, not just in Singapore but in countries like Australia.

‘We have noticed a clear trend since the limitations were introduced and can already feel things changing this quarter… This trend is likely to continue, with the Chinese increasingly significant in their buying power.’

While mass-market homes might have been bought for owner-occupation by PRs, the high-end homes were probably bought by cash-rich businessmen for investment purposes, Mr Tan added.

JLL’s South-east Asia research head, Dr Chua Yang Liang, said prices are likely to stay up thanks to continued interest from foreign buyers, especially those from China and the region.

‘The surge in Chinese buyers in Singapore coincided with the policy tightening in China,’ said Dr Chua. ‘We can expect the number of Chinese buyers to continue at a healthy level… as the fiscal and monetary policies in China remain conducive to overseas investment by the wealthier Chinese.’

The Shanghai authorities, for example, announced on Monday that it will limit gains in new home prices to no more than the pace of economic growth and average income expansion.

Source: Straits Times, 31 Mar 2011

URA data also shows nearly half of them will be in the core central region

CLOSE to half of the estimated 8,430 new private homes that are slated to be completed in 2011 will be in the upmarket core central region, according to fresh data released by the Urban Redevelopment Authority (URA) yesterday.

The government agency has also bumped up its estimate for the projected supply of private homes due to be completed this year by 25 per cent from three months ago. In October 2010, URA estimated that 6,766 new private homes will be completed in 2011.

Sources told BT that URA has been surveying developers more closely over the last few months in a bid to compile more accurate pipeline supply figures. The agency computes the estimated supply of private housing units in the pipeline through a quarterly survey of developers.

In response to a query from BT, URA said it will continue to work closely with developers to ensure that they submit up-to-date estimations of the expected completion dates of their projects.

‘URA’s survey of the developers’ completion (for 2011) is only starting to increase. The increase from Q3 2010′s forecast for 2011 completions to Q4 2010′s forecast is a significant 25 per cent. Over the next few quarters, we expect to see further upward revisions,’ said Ku Swee Yong, chief executive of real estate firm International Property Advisor.

Looking at the latest completion estimates, analysts once again warned that home-buyers need to brace themselves for a very large supply of private residential units due to be completed each year from 2011 to 2015.

URA currently estimates that 8,116 units will be completed in 2012; 17,111 units in 2013; 17,421 units in 2014; and 13,453 units in 2015.

In fact, 2010′s number of newly completed private homes, which stands at around 10,400 units, is already higher than the historical average annual increase in housing supply of around 6,400 private units over the last decade, Mr Ku pointed out. For 2011, a total of 3,874 homes will be added to the housing supply in the core central region, which includes the prime districts 9, 10 and 11, Marina Bay and Sentosa Cove. This will make up 46 per cent of the islandwide housing supply of 8,430 new private homes.

Another 2,265 private homes will be completed in the rest of central region, while in the outside central region, 2,291 units will be completed this year.

URA also said that as at the end of Q4 2010, there was a total supply of 65,699 uncompleted units of private housing from projects in the pipeline. Of these, 32,776 units were still unsold.

Source: Business Times, 29 Jan 2011

Up to 22,000 new flats may be offered under the build-to-order system

HDB resale prices rose by 2.5 per cent in the fourth quarter of 2010 – a tad higher than the 2.4 per cent climb estimated earlier this month – even as the number of deals and the cash-over-valuation (COV) amounts commanded by flats fell.

Data from the Housing & Development Board (HDB) released yesterday showed that the official resale price index climbed to yet another new high in Q4 2010. For the whole of 2010, HDB resale prices rose by 14.1 per cent.

Prices rose even as the median COV amount among all resale transactions fell by $7,000 (or 23 per cent) from $30,000 in Q3 2010 to $23,000 in Q4 2010.

But prices still rose as valuations of most types of HDB flats climbed in Q4, analysts said.

The number of resale transactions fell by about 21 per cent, from 8,205 in Q3 2010 to 6,454 in Q4 2010. The total number of resale transactions in 2010 fell to 32,257, a decline of 13 per cent over 2009′s volume.

Analysts said that HDB flat valuations still increased in Q4 2010, in spite of a number of cooling measures introduced in August 2010, as there is usually a lag time of about six to eight weeks before price corrections would align with the actual sentiment in the market.

But resale prices could soon plateau, PropNex chief executive Mohamed Ismail said.

HDB’s Q4 2010 data shows that median resale prices of 3-room, 4-room, 5-room and executive flats stood at $300,000, $385,000, $460,000 and $548,000 respectively, he said.

But PropNex’s in-house data for deals done in January shows median resale prices of $298,000, $393,000, $466,000 and $538,000 respectively – a 1.8 per cent drop to 2.1 per cent increase from Q4 2010.

‘It must also be highlighted that some of our data reflects transactions that took place before the additional cooling measures announced on Jan 13, 2011,’ added Mr Mohd Ismail. ‘Feedback from the ground has indicated that there is less movement among the current HDB dwellers due to the (new) 60 per cent loan-to-value (LTV) cap. Therefore, it is possible to see a further dip, though not drastic one, for median COVs and sales volume in Q1 2011.’

HDB plans to offer up to 22,000 new flats under the build-to-order (BTO) system if demand is sustained.

The BTO supply will also be supplemented by the upcoming supply of flats under the design, build & sell scheme (DBSS) and the executive condominium (EC) housing scheme. Four more EC developments in Punggol, Pasir Ris, Bukit Panjang and Tampines will be launched for sale in the coming months by private developers.

Source: Business Times, 29 Jan 2011

URA’s sub-index for detached homes soars 37.6%, boosting overall index’s gain to 17.6%

IN a year fuelled by strong liquidity and economic growth, bungalows were the stars that led the surge in the Singapore property market in 2010. Latest data from the Urban Redevelopment Authority shows that its price index for landed homes climbed 30.8 per cent last year. The sub-index for detached houses, or bungalows, soared 37.6 per cent against a 5.6 per cent rise in 2009.

The index for non-landed private homes rose 14 per cent last year, following a 0.5 per cent gain in 2009. The biggest price hike in 2010 in this segment was for completed non-landed homes in Core Central Region, which climbed 19.5 per cent last year, although prices of uncompleted units in the same region rose at a much slower rate of 10.6 per cent in 2010.

URA’s overall price index for private homes swelled 17.6 per cent last year, after posting a 1.8 per cent rise in 2009. It rose 2.7 per cent quarter on quarter in Q4 2010.

Knight Frank chairman Tan Tiong Cheng observed that the index has appreciated by about 65 per cent over the past five years, translating to an average annual increase of 13 per cent. ‘This is a very significant increase considering that we had the biggest financial crisis during this period,’ he added. Developers sold a record 16,292 private homes (excluding executive condos) last year, up 10.9 per cent from 2009 and busting the previous high of 14,811 units in 2007.

The other sectors of the property market also saw sharp turnarounds last year, according to the latest URA numbers. For instance, the office price index rose 18.9 per cent in 2010, against a 16.4 per cent drop in 2009. Flatted factory and warehouse prices, too, shot up 23.7 per cent last year, compared with respective declines of 14.2 per cent and 16 per cent in 2009.

Looking ahead, market watchers expect some wind to be taken out of the residential sector following the latest property cooling measures. Investors are channelling their money to the commercial and industrial property segments, which were not the target of the cooling measures announced on Jan 13.

DTZ’s SE Asia research head Chua Chor Hoon is predicting a minus 5 per cent to 0 per cent change in URA’s overall private home price index this year. Others are more sanguine. Colliers International director of research and advisory Tay Huey Ying forecasts a 5-8 per cent rise with the increase led by mid and high-end properties.

Prices of mass market homes are expected to stay relatively unchanged or ease by up to 2 per cent given the ample new supply in this segment, she said.

As for the landed segment, RealStar Premier Property managing director William Wong, who had earlier predicted an average 10 per cent rise this year in Good Class Bungalow (GCB) prices – the creme de la creme of landed homes on mainland Singapore, now expects prices to hold in 2011.

‘Transaction volumes are expected to fall 20-30 per cent over the next 3-6 months. Owners are not prepared to adjust prices downwards while buyers are waiting for prices to go down. This may not happen.’

Another bungalow specialist, KH Tan, managing director of Newsman Realty, said that some sellers have started to withdraw GCBs from the market following the latest cooling measures as they would face longer holding periods on any replacement bungalows they may purchase because of the hikes in seller’s stamp duties.

Nevertheless, he predicts an increase of about 10 per cent in GCB prices this year, following last year’s appreciation of about 35 per cent, because of the limited stock of GCBs, wealth effect from new ultra high net worth citizens and low interest rates. On Sentosa Cove, where foreigners may buy landed homes, the price gain this year could be higher, about 15 per cent, as ‘there are still a lot of rich Chinese foreigners coming in’. Bungalow prices on Sentosa climbed 30 per cent last year on average, he estimated.

On URA’s numbers, CB Richard Ellis executive director Li Hiaw Ho observed that while the price index for uncompleted non-landed homes in Outside Central Region (where mass-market condos are located) has surpassed the peak in Q2 2008 by 19.1 per cent, the equivalent index for Core Central Region (which covers the traditional prime districts, financial district and Sentosa Cove) is still 7.1 per cent below its Q1 2008 high.

Meanwhile, the National University of Singapore’s Singapore Residential Price Index (SRPI) flash estimate shows that prices of completed non-landed private homes in Singapore’s Central region (postal districts 1-4 and 9-11) appreciated 7.8 per cent last year, while the sub-index for the Non-Central region rose 15 per cent. As a result, the overall SRPI increased 11.9 per cent in 2010. In 2009, the three indices posted respective gains of 27.3 per cent, 19.5 per cent and 22.2 per cent.

URA’s data showed that 10,399 private homes were completed last year – close to the 10,488 units in 2009 and 10,122 units in 2008. The overall private residential rental index rose 17.9 per cent last year, a sharp reversal from the 14.6 per cent slide in 2009.

Savills Singapore director for residential leasing Patrick Lai said that overall residential rents may increase a further 5 per cent in 2011. ‘We believe that the rental rates for super high-end condominiums and GCBs will remain robust and are likely to increase by 6-10 per cent as more top executives relocate to Singapore.

‘For example, we have just leased out a 2,852 square foot unit at The Orchard Residences for $20,000 per month. We also recently handled the leasing of a GCB in the Peirce Villas/Swettenham Road neighbourhood for $40,000-45,000 per month.’

Source: Business Times, 29 Jan 2011

Some median prices, transaction figures and COV prices dip
THE HDB resale market enjoyed a boom period last year but numbers out yesterday also show that the heat may finally be coming out of the market.

Some median prices have started to decline, while transaction numbers and cash-over-valuation payments are falling.

Analysts say the trend is likely to be due to the August cooling measures imposed to apply the brakes to a runaway market.

But while the sector is clearly slowing, yesterday’s Housing Board data also confirms that 2010 was yet another bumper year for flat owners. Prices rose 2.5 per cent in the fourth quarter over the third to hit another record and bring the total growth for the year to 14.1 per cent.

This follows an 8.2 per cent increase in 2009 when the economy was still hurting from the financial crisis, a 14.5 per cent jump in 2008 and a 17.5 per cent increase in 2007.

It’s small beer maybe compared with the 90s boom when prices rocketed 34.3 per cent in 1996 alone, but still a good run for owners.

However, analysts noted yesterday that price rises were ‘gentler’ in the last three months of 2010, which had the lowest quarterly growth since the second quarter of 2009. Other figures point to the same trend. The HDB’s numbers confirmed that cash premium paid by buyers over a flat’s valuation, known as cash-over-valuation (COV), fell islandwide in the quarter.

Overall median COV for the fourth quarter fell to $23,000 from $30,000 in the third, with 96 per cent of sales transacted above valuation.

The fall was more obvious in certain areas such as Central, Sembawang and Queenstown, which all recorded declines of about 35 per cent in median COV.

In Queenstown, for example, the median COV fell from $35,000 in the third quarter to $23,000 in the fourth.

The decline in COVs seems to have continued into this month, according to agency sales figures.

The median COV range has fallen further to about $16,500 for three-roomers and $25,000 for five-room flats, said PropNex spokesman Adam Tan.

ERA Asia Pacific key executive officer Eugene Lim said that based on his firm’s sales this month, median COVs has fallen to about $21,000.

While COVs are falling, resale prices were still inching up across most towns.

Analysts said this was due to the time lag in the valuations, which are based on transactions in months before the cooling measures hit. Last August, the Government tightened financing and restricted ownership of resale flats in a bid to calm the buoyant market.

While most towns registered slight price increases in the quarter, Jurong East and Choa Chu Kang had declines.

The median resale price of an executive flat in Jurong East dropped from $631,500 in the third quarter to $585,900 in the fourth. A four-roomer in the Central area also dropped, from a median $471,000 to $456,500.

Declining transaction numbers also point to a slowing market. The number of flats sold fell from 8,205 in the third quarter to 6,454 in the fourth, a decline of about 21 per cent. Sales dropped 13 per cent to 32,257 for the full year.

Industry observers said yesterday that the 14.1 per cent price rise for 2010 reflected the economy’s record growth of 14.7 per cent. But they also said that HDB resale prices would moderate further this year with marginal price increases as the heightened cooling measures took hold.

Earlier this month, the Government unleashed another round of measures. It reduced the amount a buyer can borrow for a second home to 60 per cent of the purchase price and sharply increased sellers’ stamp duties to curb speculation.

‘This will lead to less activity in the HDB upgrader segment, as they won’t be able to stump up 40 per cent down payment,’ said PropNex’s Mr Tan.

Mr Colin Tan, a research and consultancy director at Chesterton Suntec International, said the ‘problem of runaway HDB price rises looks contained’ and expects the market to stabilise further.

Meanwhile, the HDB offered 17,700 new flats under its build-to-order (BTO) scheme last year and plans to offer another 22,000 this year if there is demand.

There will be a further 8,000 executive condominium units and design, build and sell scheme (DBSS) homes as well.

Source: Straits Times, 29 Jan 2011

PRIVATE home prices may have moved up 17.6 per cent last year, eclipsing historical peaks and setting new highs across various segments in the process, but this year is expected to be far less exciting.

Analysts say price growth is expected to slow, and the volume of sales is set for a significant fall.

There was more evidence of this in new data released by the Urban Redevelopment Authority (URA) yesterday, which saw prices moderating across most segments as the property market continued to take a breather four months into the Government’s Aug 30 property market cooling measures.

Fourth-quarter home prices gained 2.7 per cent, slightly down from the 2.9 per cent in the previous quarter and unchanged from flash estimates released earlier this month, the URA said.

However, certain segments – in particular, condominiums and detached homes – showed signs of defying gravity even after three rounds of cooling measures.

This may have contributed to the Government’s decision to introduce another round of tougher-than-expected cooling measures two weeks ago, experts said.

Prices of detached homes continued their upward march with an 8.5 per cent jump in the fourth quarter – just eclipsing the already impressive 8.4 per cent gain in the quarter before. Detached home owners saw the value of their properties rise by a hefty 37.6 per cent last year alone – the most out of any segment.

Prices of landed homes in general, however, moderated to a 5.5 per cent rise, from 7.7 per cent in the third quarter.

This was owing to slower price gains in the semi-detached and terrace segments, with a 3.1 per cent and 3.7 per cent rise in prices respectively. This follows a buoyant 7.5 per cent and 7.2 per cent price growth in the quarter before.

An uptick was also noted in the non-landed home segment, which recorded a price rise of 1.8 per cent, up from a gain of 1.6 per cent in the quarter before.

URA data shows that price growth in this segment has been falling since the second quarter of last year.

Other indexes also suggested that non-landed home prices were creeping up again as buying interest returned to the market in the later months of last year, after buyers initially retreated when the Aug 30 measures were first introduced.

The National University of Singapore’s Singapore Residential Price Index, which tracks only the prices of completed non-landed projects, posted a 0.9 per cent month-on-month rise last month – the first increase after two months.

Homes in non-central areas recorded an even larger gain of 2.2 per cent.

Ms Tay Huey Ying, Colliers International’s director of research and advisory, noted that price gains of suburban homes also strengthened to 2.1 per cent, up from the initial estimate of 1.6 per cent.

‘This indicates the continued uptrend in prices for transactions that have taken place in the last two weeks of the quarter, which probably is one of the triggers for the introduction of further cooling measures in January,’ she added.

Robust sales were seen in suburban projects such as The Lakefront Residences in the Jurong Lake district, Waterview in Tampines Avenue 10 and The Tennery in Bukit Panjang in the fourth quarter.

Experts said, however, that despite impressive gains last year, this year will be a more sobering one for the market in the light of this month’s measures, which caught many by surprise.

CBRE Research executive director Li Hiaw Ho said: ‘Prices are likely to remain unchanged in view of this stand-off, but sales volume could fall in the short term. Selectively, new projects that are well-located and with good access will still see a good response.’

Source: Straits Times, 29 Jan 2011

But new housing could see oversupply in next few years, notes DTZ
HOME sales are expected to drop in the wake of the Government’s recent cooling measures, although prices should hold up fairly well, according to a new report.

But DTZ Research pointed out that the substantial supply of new housing in the pipeline could outstrip demand in the next few years, leading to prices and rentals coming under pressure.

It also flagged the challenges posed by sluggish Western economies and the possibility of more cooling measures.

The property consultancy’s report was focused partly on the possible effects of cooling measures introduced on Jan 13.

It tipped that sales volume would fall as short-term speculators would be weeded out of the market by the hefty seller’s stamp duty of up to 16 per cent for homes sold within a year of purchase.

But not all investors will withdraw. Some may find the 4 per cent seller’s stamp duty on homes sold in their fourth year of purchase to be surmountable.

They could shift their focus to buying unfinished units with completion dates three to four years ahead.

Prices this year are expected to be largely stable with a decline of not more than 5 per cent, said Ms Chua Chor Hoon, DTZ’s research head for South-east Asia and one of the report’s authors.

‘(Prices are) underpinned by economic growth, low interest rates, strong holding power of developers, the appreciation of the Singapore dollar, and the inflow of foreign purchasers due to the property market clampdown in mainland China and Hong Kong,’ she added.

Landed homes, small units and high-end apartments are expected to be less affected by the measures.

Said DTZ executive director (residential) Margaret Thean: ‘Small units with their low price quantum will continue to attract investors with spare cash or singles wanting their own units.’

She also said the seller’s stamp duty will have little impact on landed homes as most are purchased for owner-occupation, while high-end apartments will continue to attract foreign interest.

Other challenges come in the form of a potential oversupply.

A spike in completed units is expected in the next two to three years, with the Government putting out a record number of homes through public housing and land sales programmes.

‘There is also uncertainty over the strength of recovery of the major Western economies. If they recover well, interest rates will move up and reduce the affordability of mortgage payments,’ the report added.

‘On the other hand, if they continue to languish, this will have an effect on the Singapore economy and optimism in the property market eventually.’

With the residential market facing numerous challenges, investors are likely to identify opportunities in other property sectors and alternative investment products, DTZ said.

Source: Straits Times, 28 Jan 2011

Activity-filled year marked by record prices and sales volumes, then cooling measures
THE property market turned in a very lively year, to say the least, with record prices and sales volumes and then the dousing effects of the Government’s latest round of cooling measures.

It was also a year of comebacks, with executive condominiums (ECs) staging a return after a five-year absence. Collective sales rebounded strongly and are poised for an even bigger comeback next year, whetting the appetite of developers eager to plump up land banks.

After 12 months chock-full of surprises, however, more flux might be in store next year with some market watchers predicting a possible round of government intervention to cool the still buoyant market.

This follows three sets of cooling measures unveiled in September last year, and then in February and August this year, as private home prices eclipsed the previous 1996 peak in the second quarter.

In fact, home prices were already up 14.4 per cent in the first nine months of this year according to Urban Redevelopment Authority’s (URA) data, with new private home sales volumes rocketing to an all-time high of 15,025 units as at last month.

What’s in store for 2011
EXPERTS say the overall outlook for the property market remains strong.

Despite recent government moves, real estate as an asset class remains appealing, having proven its resilience during the global financial crisis, they added.

Interest rates are rock bottom – setting the stage for even cheaper home loans and other carrots to lure buyers. Experts added that these low rates are likely to be sustained into the coming year, which will also witness more foreign buying interest diverted here owing to stringent property curbs in the region.

Up-and-coming districts to watch include Tanjong Pagar, given the Government’s goal of rejuvenating the area to create a vibrant place to ‘live, work and play’.

The prime districts of 9, 10 and 11 are also worth watching as prime freehold land is very scarce. New high-end launches include CapitaLand’s The Nassim, Wing Tai’s Le Nouvel Ardmore and City Developments’ former Lucky Tower in Grange Road.

Mass market homes: Saturated

EXPERTS expect prices of mass market homes to plateau or even dip somewhat in a slight correction in the coming year. Some say this is the only segment here close to saturation point, and which might therefore face a slip in prices.

The bumper supply of mostly suburban land sites in the government land sales (GLS) programme is likely to replenish developers’ land banks and meet consumer demand, taking the heat off the segment and stalling any further price gains.

The GLS for the first half of next year is expected to yield about 14,310 new homes, an even larger offering than the release of residential land in the second half of this year, which was able to yield up to 13,905 homes – itself a record.

Kim Eng property analyst Ooi Yi Tung said that the ample supply of suburban land is a clear indication of the Government’s intentions and will discourage overly aggressive bids by developers that could eventually mean higher prices.

He does not expect prices to rise much more, and in fact sees a downward correction in prices of about 5 per cent next year.

Mid- to high-end homes: Star performers
MOVING upmarket, however, it is a different story. The mid- to high-end segments are expected to be the star performers among non-landed homes as Singapore steps up its transformation into a cosmopolitan global city. Both segments are set to gain 5 per cent to 10 per cent next year.

Mr Png Poh Soon, Knight Frank head of research and consultancy, said most buyers in the mid- to upper-tier market are young local professionals in their 30s as well as foreign buyers.

‘The solid economy and growing financial sector will bring in foreign interest and provide income support for locals. (These), combined with high liquidity, low interest rates and rising employment, will sustain demand and prices.’

Credo Real Estate managing director Karamjit Singh said the segment is often dependent on wealthy locals – both Singaporeans and permanent residents (PRs). With Singapore’s economy powering ahead and creating wealth, these homes are likely to remain firmly supported.

Kim Eng’s Mr Ooi expects high-end home prices to gain by 10 per cent next year, while mid-level homes are set to enjoy spillover effects and rise 5 per cent in price.

Luxury homes: Might finally surpass peak
LUXURY homes are likely to see price gains of between 5 per cent and 8 per cent, supported by the expansion of the financial sector and Singapore’s growing status as a financial hub in the region.

The segment – which depends largely on foreign buyers – has yet to surpass its 2007 peak both in terms of prices and volumes.

Experts said, however, that with more property cooling measures being introduced in economies such as mainland China and Hong Kong, some investors are likely to look here instead.

Ms Phylicia Ang, Savills Singapore’s executive director of residential sales, added: ‘The external demand together with the optimism surrounding the integrated resorts and robust economic recovery should continue to lend support to the private residential market.’

There is also a possibility of luxury home prices – currently 6.3 per cent below their 2007 peak – regaining this high point by the end of next year, she added.

Landed: Moderated price growth
LANDED home prices surged by 24 per cent in the first nine months of this year, according to URA data.

Experts said, however, that despite the limited supply of these homes, price gains are likely to moderate as buyers adjust to new highs. CB Richard Ellis’ data shows average landed home prices was up by almost 34 per cent compared to 2007′s peak.

Mr Ong Kah Seng, senior manager of Asia-Pacific research at Cushman & Wakefield, expects positive demand to continue into next year but at a moderated pace of 3 per cent per quarter.

Knight Frank’s Mr Png said that the good class bungalow segment – which notched up price jumps of more than 30 per cent – can expect to post further 10 per cent to 15 per cent price gains next year.

RealStar Premier Property managing director William Wong estimated that prices in prime locations such as the Tanglin neighbourhood could hit a record $2,000 per sq ft (psf) – eclipsing the current record of $1,899 psf set in 2007 for a Nassim Road bungalow.

Fresh anti-speculation steps may be taken

Collective sales are back – with $4b-6b expected in 2011
THIS year also saw a turnaround in the collective sale market, with strong developer interest returning and owners eager to sell as property prices soared.

Collective sale activity this year was healthy with 32 sales sealed, worth a total of $1.6 billion – a striking change from last year, when the $100.8 million Dragon Mansion sale was the only deal.

Larger deals are also at hand with former HUDC estate Pine Grove, Tulip Garden and Hawaii Towers just some of the mega collective sales, each of more than $600 million, that have entered the market or are expected to.

Credo’s Mr Singh said that these are just ‘the tip of the iceberg’ with more deals of more than $100 million expected next year. He expects a total of between $4 billion and $6 billion in collective sales to be sealed next year.

Mr Steven Ming, Savills executive director of investment, said that collective sale sites priced under $200 million are likely to be favoured as small to mid-sized developers that lack the capacity to undertake large-scale developments shy away from GLS tenders, turning to the collective sales market instead.

‘Freehold sites that are located in the prime areas such as districts 9, 10, 11 and 15 will be favoured as developers seek to landbank in locations where there could be limited redevelopment land purchase opportunities. Well-located commercial sites for an office or retail development will also be of interest,’ he added.

Successful collective sales are also expected to further buoy the landed homes market as home owners look for a new and upgraded asset to park their cash.

Executive condominiums (ECs)
AFTER a hiatus of five years, since La Casa in Woodlands, ECs are back with a vengeance. Launches are coming fast and furious, with three since October and another – the 540-unit Austville Residences next to Punggol Park – by next month.

Demand from the so-called sandwich class – households earning $8,000 to $10,000 a month – has been strong, with EC sales accounting for almost 20 per cent of the 3,678 new homes sold in October and last month.

More EC launches are also on the cards, with the GLS programme in the first half of next year offering four more EC sites – in Tampines, Chua Chu Kang, Punggol and Upper Serangoon – leaving home buyers spoilt for choice.

Experts, however, caution that although the initial launches have been well-received, buyers might start getting choosier in their purchases, with well-located ECs such as those near MRT stations likely to pull ahead.

Another round of measures?

SURGING private homes sales, especially a higher-than-expected 1,909 new units sold last month, have also raised red flags, with some experts predicting a fresh round of finely tuned cooling measures.

Ms Tay Huey Ying, associate director of research and consultancy at Colliers International, described the rocketing sales figures as quite ‘worrying’.

Jones Lang LaSalle’s head of research for South-east Asia, Dr Chua Yang Liang, said the growing numbers of overseas buyers and investors are clouding the picture and making it difficult to tell if sales activity is influenced by foreign or local policies.

He added, however, that although Singapore has increasingly seen more intervention in the property segment, overtly aggressive policies are unlikely as they could damage the market and so hit economic growth.

If measures are taken, the Government is likely to favour a ‘softer’ approach, allowing the market space to correct itself, he said.

Steps that analysts have speculated the Government could take include further lowering the ratio of a property’s value that a borrower may obtain as a mortgage on second and third mortgages, ortightening Central Provident Fund withdrawal limits.

Source: Straits Times, 25 Dec 2010

Its view goes against trend as several research houses flag risks in sector

ANALYSTS from Credit Suisse are positive on Singapore’s residential property market, going against the tide as a few other research houses flag risks in the sector.

In a report on Monday, Credit Suisse said that it expects home prices here to increase by 15 per cent year-on-year this year, and by another 5 per cent in 2011 and 2012 each.

‘The low interest rate environment, historical high rate of GDP growth as well as continued population growth should propel growth in the Singapore residential property market,’ it explained.

Credit Suisse acknowledged that there were potential risks such as capital inflow controls or more anti-speculation measures from the government.

But it pointed out that the average valuation of Singapore property stocks is still below the historical average, and the residential sector is ‘reaching the peak with decelerating growth momentum’.

Credit Suisse has an ‘outperform’ call on City Developments (CDL) and set the target price at $17.16. The counter closed at $13 yesterday after gaining four cents.

‘While the market could be concerned that 37 per cent of its RNAV (revised net asset value) is in residential, the landbank had been mostly acquired at low costs, and we estimate 56 per cent is in the luxury sector, which has lagged the mass market segments,’ Credit Suisse said.

It also has an ‘outperform’ call on Overseas Union Enterprise (OUE) with a target price of $4.20. OUE lost six cents to end trading at $3.31 yesterday.

Credit Suisse’s views on the Singapore home market differ from those of several other research houses – many are expecting further government intervention to weigh down on the sector.

Analysts from Nomura said in a report on Monday that ‘policy overhang should translate into a flattish outlook for home prices in 2011′. One measure the government might consider is the restriction of property purchases by foreigners, they suggested.

‘Underlying housing demand and overall liquidity conditions are still keeping the property market relatively buoyant, despite the government’s efforts hitherto to cool the market.’

Just yesterday, official data showed that developers sold 2,084 private homes (including executive condominiums) in November – 31 per cent more than in October.

CIMB also issued unfavourable views on the residential sector last week. A large supply of homes in the pipeline and a tighter immigration policy could hit the market, it said. It has an ‘underperform’ call on CDL, and prefers Keppel Land and OUE.

Credit Suisse is positive not just on Singapore’s residential property market, but also on those in Hong Kong and Japan. ‘We believe the low interest rate environment and ample liquidity will drive residential property markets higher,’ it said.

It is cautious only on China, where the government is determined to control property prices and capital inflows are subject to restrictions, it said.

Source: Business Times, 16 Dec 2010

Since the announcement last month of another bumper crop of land for new residential projects for the first half of next year, there has been a pick-up in the number of comments from the real estate industry raising concerns about a potential oversupply of residential housing.

Most developers, though, do not appear to be too concerned as they are convinced that the demand will still be there. I am inclined to agree with them.

On offer under the Confirmed List for the first-half of next year are 17 residential sites with potential for 8,100 private and executive condominium units.

This is close to the record 8,135 units offered under Confirmed List sites in the second half of this year.

Including Reserve List sites, the 1H2011 Government Land Sales Programme will have a total of 30 sites that can generate a record 14,300 residential units – even higher than the record 13,900 residential units offered for 2H2010.

According to official figures, the total potential supply of private housing units – including confirmed sites for 1H2011 – that can be completed within the next few years will be about 80,200 units.

This figure is only for the private housing market. What about the much higher-than-normal supply in the public housing market compared to only a few years ago? The two markets are still interlinked, despite the significant differences.

Whichever way you try to justify it, the supply looks to be simply too much. I drew attention to this problem as far back as a year ago and, since then, it is has been a topic oft-written about by others.

Having said that, it is not as if the majority of purchasers – many of whom are investors – are ignorant of the potential oversupply.

I am very sure they are either buyers certain of fundamentals catching up or they are supremely confident high-stakes gamblers.

If you are one such buyer and do not see yourself in either camp, you had better ask yourself why you have made a purchase.

If some market experts still cannot understand this continued buying, I doubt they really know what is driving the market.

Recently, I was pressed by a veteran property investor of more than 20 years to describe the situation unfolding before us.

Here’s what I said to him: The present situation is like an underwater earthquake setting off a giant tsunami. Thousands of kilometres away, it is coming and almost all of us know about it as it is well-publicised.

What we are unsure about is when and how hard it will hit us. Do we seek refuge now or is there enough time to enjoy ourselves a bit more? And how far up the slopes and hills do we need to go to escape the approaching waves?

In the meantime, a lot can happen. Fortunes can be made and opportunities lost.

Nowadays, it is a lot harder to predict when the tsunami will hit the shores as it is close to impossible to read what governments will do.

It is no use making statements such as “the low-interest rate environment is unsustainable for long periods of time”.

Collectively, governments have proven that they can let rates stay low for far longer than we could have imagined only 12-18 months ago.

Those raising the spectre of oversupply can do better to steer the market away from the damaging effects of a glut by urging more action on the demand side of the housing equation.

Do they really expect the authorities to heed their advice and reduce supply? The most recent set of demand-side cooling measures in August raised the heckles of many would-be investors and buyers and generated many complaints to the press.

By managing the ample liquidity from the supply side, the authorities can say: “It is your call.”

Nevertheless, the authorities should be mindful of the groups where the burden of an oversupply falls heaviest on.

Developers and financiers? Yes, on some of them anyway.

Investors? Yes, the impact of oversupply will hit most of them.

Owner occupiers? They should be unaffected – if they have been prudent in their purchases.

But all of us know that buying a home is almost always an emotional process. It has always been: “This is going to be my first and last property”, and so there is no reason not to splurge on it.

By Colin Tan, Head, Research & Consultancy at Chesterton Suntec International.

Source: Today, 10 Dec 2010