Residential

H1 private homes rental yield increasing  

Data from the Urban Redevelopment Authority that was compiled by STProperty showed that the gross rental yields for private homes has increased in H1 2014, especially in the suburban area of Singapore. The gross rental yields are measured based on the annual median gross rent per square foot and the median resale price per square foot for that area. Gross rental yields in the north-east region have surged from 3.73 per cent last year to 4.03 per cent in H1 2014. Prime locations like Orchard had one of the lowest gross rental yields at 2.7 per cent in H1 this year. However, all regions across Singapore experienced an improvement in gross rental yields. Nonetheless, analysts believe that the recent spike was merely an anomaly that was caused by buyers’ anticipation of capital appreciation, as rental yields have been in a slump since 2009. Analysts argue that vacancy rates have increased and the leasing market remains weak. As such, Ong Kah Seng from R’ST Research does not expect the increase in rental yields to affect buying decisions. He warns that net yields should take into consideration all costs and taxes related to the rental. Also it should measure a basket of transacted units over a period of time in order to measure the actual net yield. Yet, Christine Li from OrangeTee believes that the increase in gross rental yields is a form of price correction.

(Source: Business Times)

MND: Easing property stamp duty will force prices up

In parliament, Member of Parliament Foo Mee Har questioned the need to retain current property cooling measures, such as those related to the Additional Buyer’s Stamp Duty (ABSD). In response to that, Minister for National Development Khaw Boon Wan said that said that if cooling measures were eased, it would create an upwards pressure on demand and force property prices up. Nonetheless, there are concessions for married Singaporean couples and other home owners who want to upgrade their flats, said Minister Khaw. Market watchers predict that there would be 1.5 per cent drop in prices every quarter for the next two years given that cooling measures are unlikely to be lifted soon. Under the ABSD scheme, Singapore citizens who already own one residential property will have to pay 7 per cent in stamp duty if they purchase another home. Also, Singapore citizens with more than one property will pay 10 per cent in stamp duty when on their subsequent purchase. Since the introduction of such cooling measures, residential prices have begun easing. Song Seng Wun, from CIMB, predicts that the government will not ease cooling measures as long as global interest rates do not increase.

(Source: Business Times)

HDB resale flat prices at new low

Prices of resale HDB flats have hit a new low since February 2012. According to data by the Singapore Real Estate Exchange (SRX), prices fell by 0.8 per cent in June and 0.9 per cent in July. Market experts believe that the mortgage servicing ratio (MSR), the total debt servicing ratio (TDSR) framework and the capping of loan tenures at 25 years have contributed to the fall in HDB resale flat prices. Market experts expect resale prices to fall by 8 per cent by the end of 2014. Currently, prices have decreased by a total of 4 per cent since the start of 2014. Ong Kah Seng from R’ST Research believes that resale prices will be stabilised next year. With the increase in build-to-order flats and balance flats, the HDB resale market has shrunk. Yet, in July, 1,341 HDB flats were sold. This was a 2 per cent increase from June. Nonetheless, Ong predicts that resale property volumes will fall again in August as buyers are less likely to make purchases during the “hungry ghost month.” On the other hand, rental property volumes have improved by 1.7 per cent to 1,600 HDB flats in July. Eugene Lim from ERA Realty said that HDB flat’s rental yields are higher than that of private properties. He said that HDB rental flats can reap about 6 to 8 per cent in rental yields, while private home owners usually reap only about 2 to 4 per cent in terms of rental yields. Nonetheless Christine Li from OrangeTee predicts that the HDB leasing market will remain weak as demand from foreign workers shrinks.

(Source: Business Times)

Increase in H1 transaction volume for Good Class Bungalows

A Good Class Bungalow located along Jervois Road and Tanglin Road has been sold for $18.8 million or $1,247 per square foot. The two-storey freehold bungalow is about 15,073 square feet and has a total built-up area of about 7,600 square feet. In the last 11 years, the bungalow has changed hands four times. According to Urban Redevelopment Authority, 39 locations have been demarcated as Good Class Bungalow Areas. Homes residing in such areas cannot be sub-divided or built more than two storeys high. They typically have a minimum land area of 1,400 square metres. According to CBRE, 15 Good Class Bungalow transactions were made in H1 this year. This has boosted the total transaction value to more than $344 million, which is higher than the $233 million that was transacted in H2 last year. Despite the increase in transaction volumes in the first half of the year, William Wong from RealStar Premier Group said that the total debt servicing ratio framework has affected the sales of Good Class Bungalows. Wong predicts that by Q4 this year, buyers would have adjusted to the new prices and there may be more transactions made.

TDSR affects tender of site at Fernvale Road

Two residential sites at Fernvale Road attracted fewer tender bids and lower bidding prices, compared to two other sites within the area that were sold last year. Analysts believe that the total debt servicing ratio (TDSR) framework has weakened the market. The 99-year Parcel A plot at Fernvale Road attracted only four bids while its adjacent site, Parcel B, drew only three bids. On the other hand, two other sites that tendered in April and June last year had attracted eight and nine bids respectively. The winning bid for Parcel A and B at Fernvale Road was at $438.17 psf ppr and $448.35 psf ppr respectively. Yet, last year, the other two neighbouring site sold for $489 psf ppr and $533 psf ppr. Those two sites are being developed into condos with a water-frontage, said Ong Teck Hui from JLL. Following the implementation of TDSR framework, developers are less willing to bid highly for land plots due to the shrinking property market said Nicholas Mak from SLP International.

(Source: Business Times)

Commercial

Greater collaboration among property agents amidst slowing market

JLL Singapore has recently acquired a 20 per cent stake in PropNex International. This acquisition comes amidst a slowing property market. According to Christopher Fossick from JLL, this move will enable the two property agencies to share resources, and at the same time, help JLL to strengthen its network in Singapore. On the other hand, PropNex will be able to extend its portfolio internationally by leveraging on JLL’s network. PropNex, which closes about 31,000 transactions per year, is a strong contender in Singapore. It owns at least one third of the market share. Steven Tan from OrangeTee predicts that there will be more partnerships among property agents in the months to come as the market size shrinks. According to Tan, since the start of a partnership between four agencies, the Project Alliance Group has been able to sell more properties. Tan added that other smaller agencies may soon join this alliance.

(Source: Business Times)

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