Resale market sees greater activity in Q4 2015; analysts expect better numbers in 2016
According to the Housing and Development Board (HDB), resale transaction volume increased 11.5 per cent year-on-year in 2015. Quarter-on-quarter, resale transaction volume of HDB flats in Q4 2015 increased two per cent. While the resale market was rather active, analysts noted the headwinds that could dampen Singapore's property market. The Resale Price Index (RPI) - price movement information in the resale public housing market - rose to 134.6 in 4Q 2015, a mere 0.1 per cent increase from 134.8 in 3Q 2015.
Analysts expect the transaction volume of resale public houses to continue rising for the rest of 2016. They are wary however that the market is vulnerable to the state of the economy, and signs of a downturn would cause buyers and sellers to be cautious.
Rents and private residential prices fell in 2015
Urban Redevelopment Authority (URA) data shows private home prices recorded their longest losing streak in 17 years after prices fell 0.5 per cent in Q4 2015. Prices did however drop at a slower rate. In Q4 2015, prices dipped 0.5 per cent, to 141.6 points, compared to the 1.3 per cent dip in the preceding quarter. In 2015, private home prices fell 3.7 per cent, also a slower decline compared to the 4 per cent dip in 2014.
Likewise, private property rentals fell in 2015. Q4 2015 rents fell 1.3 per cent after sliding 0.6 per cent in Q3 2015. For the whole of 2015, rents of private residential properties dropped 4.6 per cent, an accelerated dip compared to the three per cent slide in 2014.
Prices of landed property saw prices slide at a faster rate, falling 1.8 per cent in Q4 2015, as opposed to the 0.4 per cent dip in Q3 2015, with prices for the full year sliding 4.1 per cent.
MP calls for ABSD to be removed
Mr Christopher De Souza, Member of Parliament for Holland-Bukit Timah GRC has called for the removal of the Additional Buyer's Stamp Duty (ABSD) for Singaporeans while continuing to implement it for foreigners. He believes that this could help ensure foreigners do not speculate in Singapore's property market, while allowing Singaporeans with the financial means to purchase a second property to do so.
He suggests retaining the Total Debt Servicing Ratio (TDSR), another cooling measure that limits the amount borrowers can spend repaying debts to 60 per cent of their gross monthly income, to ensure only Singaporeans with the financial means will be able to purchase a second property.
While developers and home owners are hoping for cooling measures to be eased, a report by DBS says that based on past cooling cycles, policymakers will ease the cooling measures only after prices have dropped approximately 13-15 per cent. The report says that excessive drops in property prices would be detrimental to Singapore's overall economy. As such, the government will keep a close eye on the property market and prevent prices from declining too much or too rapidly.
Number of Singapore real estate agents falls as competition heats up
The Council for Estate Agents (CEA) says the number of real estate agents in Singapore has fallen to its lowest since 2011, a result of lacklustre performance in the property market.
As of 1st January 2016, the number of registered agents in Singapore fell to 29,262, a 5.1 per cent reduction from 30,830 in 2014. The fall in numbers was a result of a large dip in the number of new entrants. Fewer agents left the industry between 1st January 2015 and 31st December 2015, 3,573 compared to 3,959 in 2014, 8.7 per cent fewer. Entry of new real estate agents however fell 56.8 per cent in 2015, with only 1,299 new entrants compared to 3,006 in 2014.
Despite a more competitive market, real estate agency PropNex and property consultancy JLL believes that the growth prospects of the luxury property market remain sound. They have teamed up to form an elite sales team of approximately 200 luxury home agents, hoping to bring more activity to Singapore's luxury residential market. Luxury properties are mainly located near Orchard Road, Marina Bay and Sentosa, with prices ranging from $5 million to $50 million.
Shunfu Ville up for en bloc again
Shunfu Ville has once again been put up for en bloc sale. According to marketing agent JLL, owners are looking for at least $688 million, or approximately $791 per square foot per plot ratio.
Shunfu Ville is located in the Bishan/Thomson area and comprises three 16-storey apartment blocks, as well as three low rise blocks of masionettes. It occupies approximately 410,000 square feet, with 358 residential units.
More than 80 per cent of owners have agreed to the collective sale; the tender exercise for Shunfu Ville closes on 10th March.
Global Property News
US home sales spike in December
According to the National Association of Realtors (NAR), United States (US) existing home sales rebounded in December, with a 14.7 per cent hike, as buyers rushed to make purchases before the end of the year. Compared to November, when existing-home sales fell 10.5 per cent to 4.76 million, December saw seasonally adjusted annual sales rise to 5.46 million. As a result of the rebound, US existing home sales was 7.7 per cent higher than in 2014.
NAR Chief Economist Lawrence Yun believes the prospect of rising mortgage rates and warmer weather in November and December led to more deals being closed in December.
A Commerce Department report says new home sales in the US leapt 10.8 per cent in December to 544,000 at an annualised pace, the highest in 10 months. This helped 2015 be the best year for the housing industry since 2007. For the whole of 2015, sales rose 14.6 per cent to 501,000.
Total housing inventory at the end 2015 was 1.79 million existing homes available for sale, 3.8 per cent lower compared to 2014, which had 1.86 million existing homes for sale. With the 2016 economic environment expected to be challenging, compounded with mortgage rates likely to rise further and demand for buying in oil-producing metro areas likely to fall, Yun believes the housing market will struggle to replicate the seven per cent rise in sales.
Existing-home sales are based on transaction closings from multiple listing services, including single-family, townhomes and co-ops.
Chinese developer shuns luxury condo market, targets upper-middle-class New Yorkers
Supply of high-end homes is rising and Managing Director of Chinese developer Xinyuan Real Estate, John Liang, believes New York's luxury condo market is resembling a bubble due to a glut in the luxury home market. As a result, the Chinese developer is shifting its focus to dual-income families and other upper-middle-class buyers. According to Halstead Property Development Marketing, Xinyuan Real Estate-developed apartments will sell at US$2,000 per sq ft (psf), below the average US$2,775 psf for new developments in the area.
Liang says that for Xinyuan's west side project, a two-bedroom unit at US2,000psf would cost approximately US$1.5 million, a figure he deems affordable for upper-middle-class New Yorkers.
Myanmar passes Condominium Law in a bid to attract foreign investments
On 22nd January, Myanmar's Union Parliament passed the draft of the Condominium Law, which legally permits foreigners to own up to 40 per cent of a condo building. This law defines a"condo" as a building with six storeys on land measuring 20,000 sq ft (1,858 sqm). Foreigners are prohibited from "managing" condos; whether they are allowed to rent units out remains unclear. As condo owners will have shared ownership of both the land and apartment, apartment owners will also own a proportion of the land and apartment. This however contradicts existing Myanmar laws prohibiting foreign entities from land ownership.
According to Myanmar's Directorate of Investment and Company Administration (DICA), the Condominium Law allows foreign investors to have access to the real estate market and could possibly reverse the decline of foreign investments in Myanmar.
UK house prices grew at a slower pace in January, expected to pick up in 2016
In January, British house prices grew at a slower than expected pace. However, mortgage lender Nationwide says the momentum in the housing market looks set to improve for the rest of 2016. A Reuters poll expected house price growth to increase 0.6 per cent. However, house price growth in January slowed to 0.3 per cent month-on-month, compared to the eight-month peak of 0.8 in December.
Despite slower growth, Nationwide said modest improvements in house price growth can be expected in the coming months due to a shortage of new homes to meet demand brought by Britain's stabilizing labour market.
Vietnam poised to take lead in Southeast Asia property market
A Bloomberg report indicates Vietnam's economy is expected to growth seven per cent in 2016, making it one of the fastest-growing markets. Due to the strong economic outlook, foreign investors have been attracted to Vietnam's stock market, bringing in greater foreign direct investment as well.
In 2015, Vietnam eased its laws on foreign ownership through the Law on Residential Housing (LRH). With an established reputation of being open to foreign investments, property experts see 2016 as a great year for Vietnam's real estate industry.
Compared to other Southeast Asian countries such as Singapore, Malaysia and Indonesia, which are experiencing a rough period, Executive Director at real estate firm Alternaty, Mauro Gasparotti, says Vietnam is ready to lead the region's property market over the upcoming two to three years.
Developers in Vietnam are confident that rapid urbanisation will be a further stimulus for the domestic market as long as infrastructure improvements and clear guidelines on investments are provided.
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