New private homes sales up 5.4% in May!

Sales of new private homes, excluding executive condominiums, climbed 5.4% to 1,455 units in May.

This is compared to 1,380 new homes sold in April 2013, according to figures released by the Urban Redevelopment Authority (URA).

The number of new private homes sold in the city fringes jumped by about 27% from 473 units in April to 602 units in May.

This was mostly due to new project launches in the area.

However, sales of new private homes in the city area dropped to 125 units in May, compared to 178 units in the previous month.

Meanwhile, new private home sales in the suburbs contributed to slightly under half of the sales volume in May.

The take-up rate for new homes remained stable at 728 units in May compared to April's 729 units.

Source: Channel News Asia

Private resale dips in May!

Prices of resale private homes softened in May as the government's cooling measures continued to dampen the market.

Non-landed private residential units showed an overall price drop of 0.5% in May compared to April, according to data from major property agencies compiled by the Singapore Real Estate Exchange (SRX).

Prices of resale non-landed private homes in the city area dropped 0.5% over the previous month while those in the city fringes declined 0.4%.

However, prices of resale suburban private homes remained resilient, reporting a 0.3% increase.

The SRX projected the final volume figure in May to be around 750 units, which would exceed the 671 units sold in April. This would still represent a 40% drop from the same period last year. There were 1,292 non-landed resale cases in May 2012.

Orange Tee's Head of Research & Consultancy Christine Li said the stand-off in the resale market could be due to the mismatch in expectations between buyers and sellers, who are still reluctant to reduce asking prices amid record property prices.

As a result, buyers prefer to buy directly from developers who are offering discounts and incentives.

Meanwhile, overall rental prices for non-landed private residential in May slipped 0.6% from April, marking a fourth consecutive monthly drop in overall rents.

Ms Li expects rentals to slide further in the upcoming months, given the strong pipeline of new private homes slated for completion this year.

Source: Channel News Asia

First it was sub-sale, now both resale and rental continue to soften. Are we finally heading down the "cannot sell cannot rent" road..?

End of the road for "Specuvestors"..?

The level of speculative activities in the private residential market in Singapore has dropped substantially in the past few years.

Sub-sales of private residential properties hit a six-year low of 4.5% in the first quarter of 2013, according to data from the Urban Redevelopment Authority.

Analysts said sub-sales - which refer to the resale of uncompleted units - should continue to trend down in the next year.

In the past, some investors have been able to make a quick buck by flipping private residential properties.

But it has been a lot less profitable to do so after the government introduced the Seller's Stamp Duty in 2010.

It later increased the sales tax and holding period for properties in 2011.

The moves have helped bring down sub-sales, an indicator of speculative activity, over the last three years.

Nicholas Mak, executive director of SLP International Property Consultants, said: "The number of speculative sales as a percentage of total number of sales has dropped to about the same level as 2006.

"We are seeing one of the lowest levels, you can almost say that speculation has gone to such a low level it is no longer a problem."

From 14 January 2011, buyers who sold properties within four years of their acquisition will have to pay a tiered sales tax, with a hefty 16% levy imposed on those sold in the first year and 12% in the second year.

Units re-sold in the third and fourth year will have a Seller's Stamp Duty of 8% and 4% respectively.

Alan Cheong, research head at Savills Singapore, said: "People are not going to pay 16%; even if you make 20%, they are not going to say I am content with a 4% gain, and lose 16% in terms of a Seller's Stamp Duty. That will be a big turnoff for people thinking of sub-selling."

Mr Cheong said the sub-sales segment is also losing steam because many home hunters prefer buying new units from developers at project launches.

With these measures, analysts said the average holding period of private homes has increased from six years to 10 years in the last few years.

Ku Swee Yong, CEO of International Property Advisor, said: "Speculative activities are still around, but they are outside of the residential segment now. So (this is) good news for the residential segment; it means that we can expect more price stability and less speculative activity that might bring risk to the rest of the market.

"Less speculative activity means that there are fewer investors who are stretching themselves."

Going forward, analysts believe the sub-sales number should remain fairly low, unless there is a severe economic downturn forcing owners to sell, or if home prices run up substantially and home owners could still make a decent profit after accounting for the Seller's Stamp Duty.

Source: Channel News Asia

Revival of private resale?

Market watchers have said the private resale property market is seeing a gradual recovery after a drop in transaction volume in the first quarter this year following the introduction of cooling measures in January.

Based on preliminary estimates, some analysts said sales could potentially double in the second quarter compared to the first quarter.

New private homes may continue to pull in the buyers, but some analysts said the resale private property market is also picking up.

Real estate agency PropNex said it has seen resale transaction volume jump 20% in April and May. Enquiries and turnout at viewings of resale units have also improved, largely because buyers believe resale properties offer better value and comparable rental yield.

Mohamed Ismail, CEO of PropNex, said: "Sky Habitat at Bishan... is $1,600 psf (per square foot). Bishan 8, opposite, goes at $1,100. In other words, when you buy a resale unit, you are going to pay lower per square foot... absolute quantum is going to be lower, which means you pay lesser ABSD (additional buyer's stamp duty) to the government."

SLP International Property Consultants estimates that some 3,600 to 4,300 units of both completed and uncompleted units in the resale market could change hands in the second quarter.

This is up from about 2,200 units sold in the previous quarter.

Based on caveats lodged, analysts said that about 3,500 resale units have been transacted from January to early May this year.

About two-thirds of them are "family-sized" units above 100 square metres.

They added that the resale property market is likely to see a sustainable recovery, but there are potential risks as well.

Nicholas Mak, executive director of SLP International Property Consultants, said: "If prices continue to increase and rental yields continue to be compressed, one of the risks is that if interest rates were to increase this year or next year, we could see that this would actually discourage investors, because if rental yield is compressed to such a low level, any increase in interest rates would make that investment property less attractive."

Mr Mak said that currently, the average rental yield for private homes in Singapore hovers between 1.8% and 2.2%.

Some analysts said that prices in the resale market are catching up with prices of units in new launches. For the whole year, they said that prices of resale private properties could go up by as much as 8%, barring any additional cooling measures.

Some analysts added that the total units of resale private homes sold in 2013 should be comparable to the 15,136 transacted last year.

Source: Channel News Asia

What the report did not mention is that as more and more new developments get completed and come on stream from 2014 onwards, rental yields are likely to be further depressed even if prices of new and resale units do not increase significantly.

The wife and I feel that rental yields for both luxury apartments and smaller-sized units in suburban projects that were launched over the past 2 years are especially vulnerable with the expected large influx of new apartments into the market over the next 2 - 3 years.

Have a great weekend, everyone!

SRPI: Resale prices up 1.9% in April

Resale prices of private homes in Singapore rose at a faster rate of 1.9% in April, compared to the previous month's 1.1% price increase.

The Singapore Residential Price Index (SRPI) flash estimates were published by the Institute of Real Estate Studies at the National University of Singapore on Tuesday.

The price increase was led by private homes outside the central region, which rose 2.4% in April, reversing the 0.2% drop in March.

Prices of small units, defined as 506sqft and below, also trended upwards from 0.8% in March to 1.8% last month.

Meanwhile, resale homes in the central region bucked the trend as price growth moderated.

The SRPI for homes in the central area rose 1.3% in April, down from the 2.8% increase seen in March.

Source: Channel News Asia