Private Property prices......still up or down? Part II

[Showster]

SLA has a leasehold table, commonly known as Bala's Table, that is used by property industry players as a guide for leasehold property valuation. The table shows the value of a leasehold property with different lease terms remaining, as a percentage of the value of a freehold property that is otherwise equivalent. If we were to assume 3% annualized growth in freehold property value, one may probably observe leasehold property value peaking when the balance tenure is around 20 years, before dropping off - it's probably not a coincidence that VERS is pegged to about 30 years or lower remaining lease terms, so that HDB flat will continue to be perceived as an appreciating asset :)

 

Capture4.PNG

This is purely based on theoretical free market values.

 

However, the last 20-30 years lease is not a favourable position to get into for the following reasons.

 

1. Cannot use CPF.

 

2. Cannot loan to buy.

 

3. For HDB, only 1 buyer, who can adjust conditions to suit the climate then for the land owner. There is no compulsion to follow Bala as well.

 

4. And what if FH land only appreciates at 1 or 2% p.a. Or falls for the 10 years before VERS?

 

But most importantly, the table tells us that for private property, in the first 30 years, land depreciation is barely noticeable.

Edited September 24, 2018 by Showster

[Lala81]

the plan must be sustainable and humanitarian/equality objectives, a bit left leaning.

A house for every family, affordable housing to those who need the space, take out any risk of fluctuations, so effort is not wasted on speculation. If you cant sell off your excess property, govt buys it back at your cost price + inflation, ownership by govt, leased to rent seekers. Not for sale to foreigners. The message is simple, there are casinos and sgx for gambling, but local housing market is off the table. Buy a house to live in.

 

i'll probably be assassinated by towkays' henchmen (or even my own ministers) 2 hours after roll-out

 

you will never make it to roll out lah.

Already kana   

[MrABC]

ST: JadeScape sees strong sales on launch weekend

 

Sold 300/480 launched units at $1,700 psf average (vs total 1,200 units)

 

https://www.straitstimes.com/business/property/jadescape-sees-strong-sales-on-launch-weekend

 

[Spring]

Quote

Meanwhile, at Jui Residences, the freehold 117-unit project by SDB Asia on Serangoon Road, was also launched on Sept 22. According to sources, the developer sold 23 units on the first day at an average of $1,700 psf. The project is a redevelopment on the site of the former National Aerated Water Co. building. Built in the 1950s, the building has to be conserved.

 

The facade of the new 18-storey condominium tower of Jui Residences is inspired by the art deco heritage of the conserved building which will be integrated with it.

 

 

In the end, they sold at avg of $1700psf?

I worked backwards from the earlier report n thought it ranged from $1500 to $1700psf so avg would have been around $1600psf but seems higher when they launched.

[Ash2017]

ST: JadeScape sees strong sales on launch weekend

 

Sold 300/480 launched units at $1,700 psf average (vs total 1,200 units)

 

https://www.straitstimes.com/business/property/jadescape-sees-strong-sales-on-launch-weekend

 

ST_20180924_BIZSALES24_4299664.jpg

 

i am confused 

 

where do all these people come from

 

where do they get their money (deposit) 

 

do they know interest rates are increasing and the financial market is not stable

 

do they expect a lot of upside to prices still

 

 

maybe they decide not to buy Lolex and dump their money in a property

 

or maybe realising there would be NO value at the end of their lease in HDB they kiasu and kiasi quickly buy a private

 

 

anybody know the reason for the good response

[Showster]

i am confused

 

where do all these people come from

 

where do they get their money (deposit)

 

do they know interest rates are increasing and the financial market is not stable

 

do they expect a lot of upside to prices still

 

 

maybe they decide not to buy Lolex and dump their money in a property

 

or maybe realising there would be NO value at the end of their lease in HDB they kiasu and kiasi quickly buy a private

 

 

anybody know the reason for the good response

Unless we do a poll, we will not know all the answers.

 

But Govt already got their stats before implementing the new CMs so they know what they are doing.

 

I think many of the enbloc are still concluding and funds are still coming in.

 

Even if they want to stop investing in the only asset class that has gained multi folds for them, they still need a place to stay as replacement at the very least.

 

Surely can support 2018 overall demand for new units at above 10,000 new units.

Edited September 24, 2018 by Showster

[Theoldjaffa]

That's very true.

 

The problem is the moment you see it (the MRT), the price has an immediate uptrend effect.

 

If you don't see it, you may have to hold very long until you see it, if you ever do.

 

Most important is whether it fits one's lifestyle, or intention (length, funds etc) if an investment. The rest we cannot tell in advance...

 

Freehold typically depreciates in building and utility value as well after 20 years onwards but typically gains in land cost. But the land is also more costly to begin with when one acquires it, except during severe downturns.

 

Leasehold depreciates in both parameters after 20 years but has still got a very gentle rate of depreciation for land. This gentle dip is likely to be matched by the increase in land cost, until probably about 50-60 years left, when the average gain in land cost of 2-3% (multiplied by 0.5 to 0.6) is less than the depreciation rate.

 

Optimal strategy is to buy something that fits one's long term property agenda.

With more and more FH sites being redeveloped into maximised plot ratio.. I guess in future (when they reach 30 years old) these condos will enbloc again and be redeveloped and sold as LH units.

[Showster]

With more and more FH sites being redeveloped into maximised plot ratio.. I guess in future (when they reach 30 years old) these condos will enbloc again and be redeveloped and sold as LH units.

Every site is always developed to max ratio, pending restrictions on GFA, height limits, traffic considerations etc.

 

The max ratio can mass change for an area or throughout as and when the authorities deem appropriate though. For example, height and/or storey limits can be removed as Paya Lebar airspace is moved away.

Edited September 24, 2018 by Showster

[Theoldjaffa]

Every site is always developed to max ratio, pending restrictions on GFA, height limits, traffic considerations etc.

 

The max ratio can mass change for an area or throughout as and when the authorities deem appropriate though. For example, height and/or storey limits can be removed as Paya Lebar airspace is moved away.

Ok I learnt something new.

 

But what I'm saying is that, for eg, FH land in Grange Road area, some older condos are low in height and not built to Max plot ratio. Developers can buy via enbloc and then maximise it.

 

30 years later, assuming plot ratio doesn't change, there's no incentive for developers to buy enbloc.. so maybe the next idea will be to hold the title in perpetuity and sell houses on LH tenure. This way, they "guarantee" their landbank holdings and have future reserves.

[Mercs]

Some luck helps too! Some owners of the freehold condos Aalto and The Belvedere along Meyer Road probably had not anticipated that they would have Tanjong Katong and Katong Park MRT stations respectively right at their door steps when they bought units there before the Thomson-East Coast Line was announced. In the neighborhood where residents mostly drive and prestigious cars are common, an underground MRT station at either end of Meyer Road really comes as a pleasant surprise :)

Agree, monetary gains aside, doorstep mrt definitely welcomed, convenient for family members to move around, even for car owners.

Easy sale in future plus value appreciation ... that goes without saying ;)

[Mercs]

In the end, they sold at avg of $1700psf?

I worked backwards from the earlier report n thought it ranged from $1500 to $1700psf so avg would have been around $1600psf but seems higher when they launched.

Units are rather smallish in size, but expected with the current sweetspot price size trend.

If to compare current LH new benchmark psf, projects totaling high hundreds if not thousands of units...

this at FH status, less units (117, more exclusive), and still with a rather 'central' location ...

psf to go even higher after cleared some units/future phases.

 

Some of the prices on launch date ...

[Mercs]

i am confused

 

where do all these people come from

 

where do they get their money (deposit)

 

do they know interest rates are increasing and the financial market is not stable

 

do they expect a lot of upside to prices still

 

 

maybe they decide not to buy Lolex and dump their money in a property

 

or maybe realising there would be NO value at the end of their lease in HDB they kiasu and kiasi quickly buy a private

 

 

anybody know the reason for the good response

Why confused, many points i've mentioned again and again previously

 

CMs since 2009, warchest getting bigger strong buy power, pent up demand build up with all the waiting

This round even stronger buy power with enbloc fever, add even more pent up demand (replacement /investment homes)

 

Tdsr benchmark 3.5% , interest rates are on the up but still low, lock in when still can.

Financial markets unstable, where else to better park the funds?

 

Price upside only if got crystal ball can tell, but the trend always been 'expensive today cheap tomorrow'

Dun even have to go far back, just compare last peak 2013 (5years) with today's, and that's with downtrend between 2013-17, any cheaper to buy today?

 

Buy lolex or buy property, which one you think to give future better returns for savvy investors?

 

With the current sentiment on hdb lease and high absd (12%) more to go pte first timers and also more upgraders, again add more demand.

 

My noob view

[Newbie26]

Fast East has already done this years ago

 

FH sell as LH

 

Silversea at east coast, record pfs at one point

 

think The shore also similar

 

in other areas,

 

Rochelle at newton, land by the club/clan etc

 

 

 

 

Ok I learnt something new.

But what I'm saying is that, for eg, FH land in Grange Road area, some older condos are low in height and not built to Max plot ratio. Developers can buy via enbloc and then maximise it.

30 years later, assuming plot ratio doesn't change, there's no incentive for developers to buy enbloc.. so maybe the next idea will be to hold the title in perpetuity and sell houses on LH tenure. This way, they "guarantee" their landbank holdings and have future reserves.

 

[Theoldjaffa]

Fast East has already done this years ago

 

FH sell as LH

 

Silversea at east coast, record pfs at one point

 

think The shore also similar

 

in other areas,

 

Rochelle at newton, land by the club/clan etc

Yup. But such practices are still rare at the moment.

 

Maybe this will be the new trend moving forward.

[Wind30]

i am confused

 

where do all these people come from

 

where do they get their money (deposit)

 

do they know interest rates are increasing and the financial market is not stable

 

do they expect a lot of upside to prices still

 

 

maybe they decide not to buy Lolex and dump their money in a property

 

or maybe realising there would be NO value at the end of their lease in HDB they kiasu and kiasi quickly buy a private

 

 

anybody know the reason for the good response

I think most of them are agents in the pic....

 

As mentioned many times in this thread all these new leasehold launch price is so out of whack, nobody in this thread will buy....

 

Why buy when u can get a bigger freehold resale apartment that no matter whether the market go up or down after 10 years, will be worth more.

 

Just go down to the development.... I bet u a lot of the units there still available... but would you buy it??

[Showster]

There are those who say the plot ratio have been set and the authorities have decided that they would not change it for the time being.

 

But history indicates this plot ratio can be adjusted. The meaning of plot ratio can also be adjusted. Govt has indicated that such revision is not due yet, but it has been done before. Plot ratio of 1.4 used to be max of four storeys (before 2000). After 2000, it became 5 storeys. There are some developments side by side where you notice the pre-2000 site is 4-storey while the post-2000 is five storey. Both are still plot ratio of 1.4. Can verify with URA as they have removed that circular for the time being.

 

https://www.stproperty.sg/articles-property/singapore-property-news/too-soon-to-bet-on-plot-ratio-hikes-analysts/a/103491

 

If one is here for the long term (say 20-30 years), its easy to predict there will be another revision or two in our lifetimes to serve intensification needs. To hit and run to sell within 5 years, then that will just be a bet.

 

And there are ways to play around with the interpretation of the plot ratio. All they have to do is to come up with a good reason. Case in point, 5% balcony and bay window used to be "free" and not included as part of GFA (1993). Then came the ruling that since buyers are sold on the free balconies when developers market to them, these areas would now be included as part of GFA (2008).

 

https://www.ura.gov.sg/Corporate/Guidelines/Circulars/dc93-18

 

http://news.asiaone.com/News/The+Business+Times/Story/A1Story20080710-75734.html

 

Right now, we still have 10% free balcony bonus GFA if my interpretation is right. So each unit's floor area should still have 10% balcony plus aircon ledge. While the developer sells it to us, this also helps them manage costs, and keep our units cooler.

 

The ruling may also be due for a revision (due Oct 2018). If the complainants about floor space used as balcony is heard, the bonus will be removed or reduced, and units will reduce in size by cutting balcony, and have further reduced/removed aircon ledges.

 

Ok I learnt something new.

But what I'm saying is that, for eg, FH land in Grange Road area, some older condos are low in height and not built to Max plot ratio. Developers can buy via enbloc and then maximise it.

30 years later, assuming plot ratio doesn't change, there's no incentive for developers to buy enbloc.. so maybe the next idea will be to hold the title in perpetuity and sell houses on LH tenure. This way, they "guarantee" their landbank holdings and have future reserves.

 

[Wind30]

Why confused, many points i've mentioned again and again previously

 

CMs since 2009, warchest getting bigger strong buy power, pent up demand build up with all the waiting

This round even stronger buy power with enbloc fever, add even more pent up demand (replacement /investment homes)

 

Tdsr benchmark 3.5% , interest rates are on the up but still low, lock in when still can.

Financial markets unstable, where else to better park the funds?

 

Price upside only if got crystal ball can tell, but the trend always been 'expensive today cheap tomorrow'

Dun even have to go far back, just compare last peak 2013 (5years) with today's, and that's with downtrend between 2013-17, any cheaper to buy today?

 

Buy lolex or buy property, which one you think to give future better returns for savvy investors?

 

With the current sentiment on hdb lease and high absd (12%) more to go pte first timers and also more upgraders, again add more demand.

 

My noob view

The big question is why not buy a resale? I think our resident Property Agent already pointed out that u can get a freehold resale for a significantly cheaper price. Irrespective of whether the market go up or down, the freehold resale will be worth more ten years later, if u paid a huge premium for the new leasehold.

 

I honestly think all these new launches prices is not trustworthy.... must have some under table discounts. Nobody is that stupid to buy at such prices vs neighbouring resale.

[Showster]

The new development prices is for the new entrants to the market with the new income levels. 

 

They should indeed go for resale (based on the head) at those price levels, but nothing beats having something new (based on the heart).

 

They would also have a few years to grow their income and prepare their savings as well if they are buying a new sales.

 

Even for enbloc sales sellers who have just received their money, at many of their ages (say 50-60 years old), it can be hard to imagine they want another old property having lived in an old property they were tired of for the last dozens of years, plus the old building maintenance. Surely it's not too much of a luxury to ask for a refreshingly new environment, even if leasehold?

 

In any case, as long as we have a property to our name, this price level is out of touch and out of reach for us already. It's not really targeted for us.

 

The big question is why not buy a resale? I think our resident Property Agent already pointed out that u can get a freehold resale for a significantly cheaper price. Irrespective of whether the market go up or down, the freehold resale will be worth more ten years later, if u paid a huge premium for the new leasehold.

I honestly think all these new launches prices is not trustworthy.... must have some under table discounts. Nobody is that stupid to buy at such prices vs neighbouring resale.

 

This price level is out of touch and out of reach for us already.

Edited September 24, 2018 by Showster