Singapore Property News This Week #217

Residential

Developers sold 42% fewer private homes in June

In June, developers sold 372 private homes. This was 42% lower than the 643 private homes sold in May. Not only so, developers have been cutting back on the supply of new homes. According to data from URA, no new projects were launched in June. On the other hand, buyers have also been negatively impacted by cooling measures such as the total debt servicing ratio that restricts buyers’ ability to finance their properties. This has led market experts to believe that the government will not be lifting the cooling measures any time soon. Desmond Sim from CBRE Research believes that developers would sell about 6,000 to 7,000 private homes this year. However, Chia Siew Chuin from Colliers International believes that buyers will return to the market if project units are reasonably priced.

(Source: Business Times)

SRX: condo rents down by 0.5% while HDB rents up by 0.1%

According to the Business Times, the residential leasing market remains weak in June due to a limited pool of tenants. In June, rents of private condos and apartments slipped by 0.5% month-on-month. Particularly, rents in the city suffered the largest drop as rents fell by 0.8%. Rents in the suburban region also fell by 0.7%. However, rents in the city-fringes remained the same. On the other hand, rental volumes rose by 1% to 3,777 units in June, up from the 3,739 units rented in May. Eugene Lim from ERA Realty said that the increase in rental volumes was not due to demand. Instead, he believes tenants are moving because they have found another place with a lower rent or is of better quality. In the HDB rental market, rents have increased by 0.1% month-on-month in June. Five-room HDB flats saw the highest increase in rents by 1.2%. Three-room flats also experienced a 0.3% increase in rents. However, four-room and executive flats recorded a 0.5% fall in rents. Lim believes that the weak private residential market will continue to impact the HDB rental market such that rents will remain low.

(Source: Business Times)

Private residential resale prices drop by 1.6% year-on-year

Data from SRX showed that year-on-year, non-landed private residential resale prices have fallen by 1.6% year-on-year, this June. Particularly, in the core central region, and outside central region, private residential resale prices have fallen by 7.1% and 2.3% respectively. However, resale prices in the city fringes have climbed by 6%. Nonetheless, the overall resale price index for non-landed private homes has increased by 0.4% month-on-month in June from May. Also, the overall median transaction over X-value (TOX) remained zero in June. Eugene Lim from ERA Realty believes that this may indicate that prices in the resale market have stabilised as this is the third consecutive month that the TOX was at zero.

(Source: Business Times)

Q2 GCB sales increases to $282m

In Q2 this year, a total of 11 good class bungalows (GCBs) changed hands. This totals up to $282.3 million, up from the 4 deals that were completed in the first quarter. Not only so, in June, a record price per square foot was achieved for a furnished bungalow in Bishopsgate at $2,190 psf. The bungalow which had two storeys and a basement was sold for a total of $33 million. According to Newsman Realty, buyers’ interest in GCBs has increased over the last three months. Newsman Realty believes that the value of GCB transactions this year may even exceed $700 million as sellers are more realistic about pricing expectations.

(Source: Business Times)

MND: HDB is responsible for rectifying defects in BTO and not DBSS flats

According to the Ministry of National Development, HDB is responsible for rectifying defects in BTO flats, while private developers are responsible for the flaws in DBSS projects. However, HDB may be roped in to help DBSS developers resolve matters. Desmond Lee Minister of State for National Development said that HDB provides broad planning parameters and sets the buyers’ eligibility requirements. As such, private developers of DBSS projects are responsible for the design, pricing and construction quality of the flat. Lee added that the structural integrity and safety of buildings are a priority and should not be compromised.

(Source: Business Times)

Commercial

Increasing interest rates may not be bad for office capital values

While interest rates have increased over the last year, it may not necessarily have a negative impact on office capital values. An analysis in the Business Times which mapped the movement of office property price index (PPI) in relation to the three-month Singapore interbank offer rate (Sibor) from Q3 1987 to Q1 2015, showed that of all the quarters where the three-month Sibor rose, the office PPI increased in 60% of them. This could be because interest rates usually rise in tandem with economic growth. As the economy grows, investors’ confidence in real estate investments may also increase. This will prop up demand for real estate. Not only so, property prices may increase further when the current inventory does not satisfy the increase in demand. As such, a higher interest rate may not always be bad news for the office market.

(Source: Business Times)

Property market unlikely to rebound even if cooling measures are relaxed

According to a property seminar by the Real Estate Developers’ Association of Singapore (Reads), the property market is unlikely to rebound even if some cooling measures were to be relaxed. Chua Hak Bin from the Bank of America Merrill Lynch believes that the property market will stagnate in the next few years. It is believed that the oversupply of private housing, the low demand and the rising vacancy rate will further weaken the property market. Not only so, manufacturing activities have remained subdued and the supply of multiple-user factory space has exceeded demand. This has pushed rental prices down, said Lee Nai Jia from DTZ. Christine Li from Cushman & Wakefield added that office leases as a proportion of total leases by floor area has fallen to only 4% in H1 this year, down from 15% in 2014. Alice Tan from Knight Frank also cautioned that the retail market outlook may not be optimistic if existing market conditions persist.

(Source: Business Times)