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

RadX

By RadX,
in Property Buzz

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Khng8

Khng8

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Land cost bidded up so much higher than surrounding projects is the Developers doing.

They can write down the land cost for the newly acquired sites to lower overall cost if they want to sell.

I guess will have to wait till nearer their ABSD deadline to see if they need to clear stock or not.

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retrozz

retrozz

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(edited)

Land cost bidded up so much higher than surrounding projects is the Developers doing.

They can write down the land cost for the newly acquired sites to lower overall cost if they want to sell.

I guess will have to wait till nearer their ABSD deadline to see if they need to clear stock or not.

 

Developers wouldn't make a loss. Already have projects offering 5% or more discount immediately after 5 July. So nett price still same to most buyers. For those with already fixed budget, they will still buy within their means. Psf might adjust slightly about 5% therotically downwards for a short time period. In reality prices will still edge up if "speculative" demands remains but at a slower rate.

 

Unlikely prices to drop much even if developers haven't clear all their stock. The newly Stirling Residences sold about 200 plus units i heard from a ERA relator in that one day and with the discount i guess sales will still move. New ABSD measures is not that "harsh" afterall as prices are now more stablised

 

If need to, developers will remove some "features" in the floorplan later on to make sure they make profit, citing some reasons for the amendments. Same old tricks. No need to pity "developers" and so far yet to see a class action by such buyers against such changes. I think the closest one is The Sail condo for that defective chute due to a PE problem

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https://www.edgeprop.sg/property-news/some-developers-postpone-others-proceed-previews

Some developers postpone, others proceed with previews

July 13, 2018

 

Word on the street is that City Developments Ltd (CDL), which was expected to preview its luxury project South Beach Residences on July 13, has chosen to postpone the event.

 

However, CDL has held firm to prices at the 124-unit New Futura at Leonie Hill Road in prime District 9. The freehold project was launched in January and is substantially sold, with many of the recent units sold at prices above $3,500 psf.

 

In contrast, YTL Singapore has previewed its luxury project 3 Orchard By-the-Park. The 77-unit luxury condo on Orchard Boulevard is priced from $3,490 psf.

 

M+S has also proceeded with the launch of the new Garden Tower at Marina One Residences. The project was launched on July 5, the same evening the property cooling measures were announced.

 

“There isn’t a lot of supply coming up in the Core Central Region (CCR) in the near term,”

“Most of the buyers of these new projects in the CCR are permanent residents and foreigners.”

 

The first penthouse at Marina One Residences that was sold for $18 million ($2,782 psf) last month.

 

the stamp duty is still lower than in Hong Kong, where overseas buyers are subject to a 30% stamp duty.

 

In the light of the strong sales figures at the showflats of projects that have brought forward their launches amid the property cooling measures introduced recently — Riverfront Residences, Stirling Residences and Park Colonial — Malaysian developer S P Setia is going ahead with its preview of Daintree Residences on July 14.

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https://www.propertyguru.com.sg/property-management-news/2018/7/173235/developers-not-to-cut-prices-massively-but-will-be-more-flexible

Developers Not To Cut Prices Massively, But Will Be More “Flexible”

July 13, 2018

 

Despite the government’s introduction of new property cooling measures, developers have no plan of slashing home prices massively.

 

GuocoLand group chief financial officer Richard Lai revealed that the company has “no intention” to cut property prices, although they will be “more flexible” when selling homes that are less attractive to buyers.

 

For high-end properties, developers expect buyers and investors, most of which are foreigners, to take a wait and see stance.

 

“The higher-end market products will have a different target market and, therefore, will have very different reactions than the more mass-market ones,”

 

Lai, on the other hand, maintained a positive outlook on the effect of the new curbs on profit margins and prices.

 

“If we compare (with figures from) a year ago, I would say that our margins have improved a lot, so if I have to absorb five percent (in duty), it’s not going to hurt us badly. It means that we will make less money, but it doesn’t mean we’ll end up losing money.”

 

However, he added that “whether are we going to do that is another question altogether”.

 

“Are we going to be a little bit more lenient in pricing in view of the new measures? Yes, we have to be more flexible. But are we going to do massive cuts? No. For the less advantageous units, we’ll have to be more flexible.”

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https://www.edgeprop.sg/property-news/market-overreacting-new-property-cooling-measures

Is the market overreacting to the new property cooling measures?

July 12, 2018

 

Home prices expected to hold steady despite cooling measures

 

New private home sales (excluding executive condominiums) for the whole of 2018 are expected to hover around 8,500 to 9,000 units – about 15 to 20% lower than the 10,566 units shifted in 2017. From January to May 2018, developers have sold 3,434 new units based on caveats lodged.

 

Developers are also expected to delay launches as they re-strategise after the new measures were implemented. With the increased ABSD on investors and foreign buyers, the demand base will likely shift towards first-time buyers. As such, offerings may need to be recalibrated to match their needs.

 

But while inventory may take a longer time to sell, developers are unlikely to reduce prices in the near term given the land costs they have already committed.

 

Further, the flurry of last minute deals done – estimated at 1,000 units from three project launches – The Stirling Residences, Park Colonial and Riverfront Residences on the evening of July 5 – suggests that there is both liquidity and pent-up demand for units in the market.

 

 

There is no oversupply in the market

 

Collective sales deals that have been concluded since 2016 could generate an estimated 25,000 new homes from 2021 onwards.

 

Coupled with the moderate Government land sales sites over the past two years, the upcoming supply of new units in the medium term does not look excessive as long as economic fundamentals remain sound.

 

Home supply completions will taper off sharply from 2018 - 2021 to an annual average of 8,104 units from the 2014 – 2017 annual average of 18,731 units, and the 10-year average of 12,948 units.

 

“While this number could rise sharply beyond 2022 due to the recent collective sale fever, it does not appear excessive if spread over a longer term. We expect annual average completions of 10,318 units over 2018 – 2022,”

 

The launch pipeline should remain fairly sustainable over the next three to four years, and developers will not necessarily need to embark on deep price cuts to sell units especially if the new launches are paced out evenly.

 

 

Economic outlook remains positive

 

The housing market is largely influenced by demand-side factors such as the state of the economy, interest rates and real income growth. And with healthy economic prospects for the year ahead, property prices are expected to stay resilient in spite of the latest policy measures.

 

For a start, Singapore’s economy is tipped to grow at between 2.5% and 3.5% in 2018, in what market observers said was a rare revision so early in the year from an earlier estimate of 1.5% to 3.5%. The improved outlook came as the Ministry of Trade and Industry (MTI) announced on May 25 that Singapore’s gross domestic product (GDP) rose 4.4% in 1Q2018, even better than the 4.3% advance estimate announced earlier. Growth was supported by both manufacturing and services.

 

Further, the local employment outlook for 3Q2018 was also projected to be the brightest in nearly three years. Of the 670 Singapore employers polled by the US-based recruitment firm, ManpowerGroup, 17% said they plan to hire, while 5% intended to cut staff. This yielded a net employment outlook of 12%, after adjusting for seasonal variations - the highest since 4Q2015.

 

According to the latest quarterly ManpowerGroup Employment Outlook Survey, the projected increase in recruitment activities in 3Q2018 is tipped to cut across all sectors. However, the finance, insurance and real estate sectors are likely to see the most aggressive hiring, with a +26% outlook. Steady recruitment activity is also expected for the transportation and utilities sectors (+13%), manufacturing (+12%), public administration and education (+12%) and services (+10%) sectors.

 

Given these strong economic fundamentals, property prices are expected to hold steady in the long term.

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Ignissport

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Land cost bidded up so much higher than surrounding projects is the Developers doing.

They can write down the land cost for the newly acquired sites to lower overall cost if they want to sell.

I guess will have to wait till nearer their ABSD deadline to see if they need to clear stock or not.

 

https://www.iproperty.com.sg/news/developers-offering-discounts-to-relief-buyers-of-bite-from-stamp-duty-hikes/

 

they already take action [rolleyes]

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therock

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https://www.99.co/blog/singapore/new-property-cooling-measures-singapore/

 

 

 

New property cooling measures in Singapore: a cause and effect analysisJULY 7, 2018

The first week of July 2018 was a rollercoaster ride for the Singapore property market. First, on Monday, the Urban Redevelopment Authority (URA) released 2Q 2018 flash estimates that indicated a strong surge in private property prices towards its previous highs of five years ago — when a series of cooling measures brought property prices on a prolonged downtrend that lasted until 2Q 2017.

After five days of optimism for the property market… a bombshell dropped.

On Friday morning, the chief of the Monetary Authority of Singapore (MAS), Singapore’s central bank, issued a statement of caution against “euphoria” in the local property market. Citizens barely had time to start a discussion based on that when the government declared new cooling measures, which would take effect at the stroke of midnight. This sent buyers into a mad four-hour scramble to beat the deadline.

Why the frenzy? Well, the severity of the 5 to 30% increase in Additional Buyers Stamp Duty (ABSD), coupled with a 5% reduction in borrowing ability in the form of a tighter loan-to-value (LTV) limit, was a huge shock to property analysts and experts, who used words such as “heavy-handed” and “draconian” to describe the measures. But when we got in touch with Associate Professor Sing Tien Foo of the National University of Singapore’s real estate department, he begged to differ.

 

What made the government pull the trigger?

“The strong price growth in the last two quarters has been concerning [the government],” A/P Sing says. “At the macro level, the uncertainties associated with rising interest rates and international trade environment could be among other potential triggers for the additional cooling measures.”

He added that, at the local level, the large supply in the pipeline — 44,261 total units — could have been a contributing factor.

cooling-measures-pipeline-supply.jpg

Credit: Urban Redevelopment Authority (URA)

 

Does the current situation merit strong additional cooling measures?

While analysts argue that the property market is only into its nascent stages of recovery, A/P Sing felt that the pace of the recent price growth could be seen as “unsustainable”. If not addressed, he argues that property prices could run out of control with “serious unintended consequences on the financial market and economics.”

So, it’s a case of swallowing a bitter pill right now, no matter how premature analysts argue this pill might be. “A more stable and sustainable housing market will be important for the long term stability of the market,” the professor asserts.

 

What’s the fallout of the new cooling measures?

If the government seems heavy-handed in increasing ABSD and tightening LTV, that’s because it wants to be exactly that. A/P Sing says the ABSD increase is intended to hit certain target groups where it hurts. These groups are:

  • Property investors who buy second and subsequent properties
  • Foreign investors
  • Developers looking for en bloc opportunities

Based on these groups, we can deduce five likely effects of this major round of cooling measures:

  • A death knell for the en-bloc fever
  • A less attractive property market for foreign investors
  • First-time buyers might go for HDB flats instead, if possible
  • A possible push toward commercial property investments
  • Capital is moved toward other investment options

 

  1. A death knell for the en-bloc fever

Private property prices spiked 9.1 per cent over the last year, undoing much of the government’s earlier work (it was previously down 11 per cent since the last peak in 2013); and the government seems to be putting the blame on the en-bloc craze led by large Chinese developers, even if they haven’t said so outright.

This would explain the incredible 30% ABSD on property developers. This huge price tag, along with already raised Development Charges (DCs), is going to be the death knell for the already fading en-bloc fever. It is also conceivable that developers who recently won bids at high reserve prices could back out of the tenders they won.

The main losers of en bloc failures are owners of aging properties – particularly owners of 99-year leasehold properties. Even the owners of aging freehold units might gripe, if they were hoping for en-bloc proceeds to form the bulk of retirement fund.

cooling-measures-en-bloc-mandarin-garden

This could be the last we hear of Mandarin Gardens en bloc for some time.

 

  1. A less attractive property market for foreign investors

With an ABSD of 20 per cent for foreign buyers, Singapore’s stamp duty rates are now closer to Hong Kong (15 to 20%), and higher than Australia (around 12%). Investors who were previously eyeing Singapore may now consider other regional property markets, given that a 20% additional tax is a hefty sum.

The higher ABSD for foreigners makes investing for rental yields even less attractive, especially as rental transaction prices have also been sluggish over the past four years, and haven’t spiked like property sale prices have.

  1. First time buyers might go for HDB flats instead, if possible

Seeing as every 3 in 4 condo transactions over the past year have been at $1 million or lower, it’s arguable that the tighter LTV limit will put the squeeze on many condo buyers. After all, an additional 5% downpayment is a huge amount, whether it’s paid by cash or CPF. Putting it number terms, the typical $800k suburban condo would now require an added $40,000 upfront, which can’t be covered by the home loan.

What this could do is to force first-time buyers to consider buying HDB resale flats instead, especially as the government has deliberately kept the LTV limit for HDB flats unchanged.

reasons-buy-shophouse.jpg

Property investors with a bigger budget may be turned towards shophouses.

 

  1. A push towards commercial property investments

With the new cooling measures on residential properties, investors may look elsewhere. And we don’t just mean property outside Singapore; there may be increased interest in commercial properties, such as office, warehouses, retail spaces and shophouses. This is because commercial properties in Singapore have no stamp duty payable.

Given that commercial properties also have a better yield (5% compared to residential’s 2 to 3%), this may be the final push that some investors need to cross over from residential to commercial property.

  1. Capital is moved toward other investment options

There’s one subtle, unstated reason why the government may be so harsh on property investors, and that’s to diversify capital allocation.

The government may prefer that capital be moved to other parts of the economy, such as investments in local businesses, rather than just in property. This is especially true for foreign investment; the government may prefer wealthy foreigners to push their money into our moribund stock market, our start-up friendly fintech scene, or corporate bonds rather than just buying up property. Our government is fully aware of the risk of investors hoarding the housing stock and potentially creating a mess when everyone of them sell at the same time once things start to go south.

In any case, those who were looking to invest in a second property may now look at other options to grow their money. Get ready for the banks to rush out their sales pitches for unit trust funds, corporate bonds, and the like.

 

What do these effects mean for the property market?

Over the next few quarters, we’ll definitely see dampened demand for property, which would rein in price growth in the Singapore housing market. This price correction could also be amplified by the slow down in new launches, and en bloc sales grinding to a near halt. Nevertheless, as developers throw up their arms, property investors need not worry too much; there’s adjustments they can make that would still enable them to reach their property investment goals — with a potentially even better, more sustainable outcome.

 

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LPPL

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https://www.propertyguru.com.sg/property-management-news/2018/7/173235/developers-not-to-cut-prices-massively-but-will-be-more-flexible

Developers Not To Cut Prices Massively, But Will Be More âFlexibleâ

July 13, 2018

 

 

They will mark up the prices by 5-10% and later give you 5-10% "discount" and say they are indirectly absorbing the additional absd. This is what developers call "flexible". Really stale tactics.
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Wt_know

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as long as buyers bite ... just like uncle chiang fish wiith a straight hook [laugh]

 

They will mark up the prices by 5-10% and later give you 5-10% "discount" and say they are indirectly absorbing the additional absd. This is what developers call "flexible". Really stale tactics.

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https://www.edgeprop.sg/property-news/unit-nassim-park-residences-reaps-245-mil-profit

Unit at Nassim Park Residences reaps $2.45 mil profit

July 14, 2018

 

Over the week of June 26 to July 3, the most profitable deal was the sale of a five-bedroom unit at Nassim Park Residences in prime District 10. The 6,932 sq ft unit on the fifth floor fetched $20.8 million ($3,001 psf) on June 29. The seller purchased the unit for $18.35 million ($2,647 psf) in 2008.

 

The second most profitable deal for the week in review was at UE Square in District 9, where a four-bedroom unit was sold for $4 million ($1,822 psf) on June 27.

The 2,196 sq ft unit on the fourth floor was bought for $1.87 million ($849 psf) in 2009. This means the seller walked away with a 114% profit of $2.14 million.

 

The third most profitable transaction for the week was for a four-bedroom unit at Residences @ Evelyn in District 11. The 2,250 sq ft unit on the 10th floor was sold for $4.02 million ($1,787 psf) on June 28. The seller made an 81% profit of $1.8 million. He purchased the unit in 2007 for $2.22 million ($987 psf).

 

Meanwhile, a two-bedroom unit transacted at The Fernhill sustained the top loss for the week in review when it was sold for $2.1 million ($1,711 psf) on June 27. The seller incurred a 14% loss of $338,000. He purchased the unit in June 2007 at $2.44 million ($1,987 psf) from the original owner, who had in turn bought it in January that same year at $1.73 million ($1,410 psf)

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https://www.edgeprop.sg/property-news/older-condos-farrer-road-holland-road-neighbourhood-still-affordable

Older condos in Farrer Road-Holland Road neighbourhood still affordable

July 15, 2018

 

Older condominiums in the Holland Road and Farrer Road area seem to be benefiting from increased buying interest. Prices at The Cornwall, a freehold 99-unit condo off Holland Road, have risen almost 25%, from an average price of $1,458 psf last year to $1,886 psf this year. The last time units at The Cornwall were sold for more than $1,800 psf was in 2013, during the last property boom.

 

Two studio units at The Cornwall changed hands recently — a 667 sq ft unit on the fifth floor was sold for $1.26 million ($1,888 psf) on June 26 and a 657 sq ft unit on the third floor fetched $1.24 million ($1,891 psf) on June 29. Prices at the development increased after the successful collective sale of Hollandia in March for $183.4 million, or $1,703 psf per plot ratio (ppr), followed by The Estoril in April for $224 million ($1,654 psf ppr).

 

At the 132-unit Waterfall Gardens, a 2,196 sq ft, three-bedroom unit on the ground floor changed hands for $3.2 million ($1,457 psf) on June 28. For the past two years, units at the eight-year old condo were sold for $1,334 to $1,561 psf. Prices at the development rose following the successful en bloc sale of Tulip Garden across the road for $907 million ($1,790 psf ppr) in mid-April.

 

This was reflected in the price of a unit at Waterfall Gardens sold later that month: The 2,196 sq ft, three-bedder changed hands for $3.75 million ($1,708 psf). Most of the units have since been transacted at more than $1,600 psf. Meanwhile, the latest sale at The Levelz, a 14-year-old condo, was that of a 926 sq ft unit on the ground floor, which went for $1.45 million ($1,566 psf) on June 29. It is the highest psf price for a ground-floor unit at the condo.

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They will mark up the prices by 5-10% and later give you 5-10% "discount" and say they are indirectly absorbing the additional absd. This is what developers call "flexible". Really stale tactics.

Haha yes, this kind of pattern, well known

Selling at high psf, even after giving a 5% absd rebate ... still high psf [:p]

 

Hearsay some new launches that have sold substantial number of units, showflats closing soon.

Developers holding units not selling, waiting for further price upside to launch future phases.

 

:D

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