Residential

Jan’s HDB resale prices fell by 0.5% month-on-month

HDB resale prices fell by 0.5% month-on-month this January – a first in the last 7 months, according to SRX Property. Nonetheless, market experts still believe that prices will be stable this year. ERA’s Eugene Lim predicts that there will be recurring monthly price movements of about 0.5%, but he added that these fluctuations should not be a cause of concern. Year on year, HDB resale prices have fallen 1.3% from January 2015, and 11.1% since April 2013. Resale volumes also fell by 8.6% from 1,407 HDB resale flats in December 2015 to 1,286 units in January 2016. Furthermore, resale demand is expected to be affected as 4,150 build-to-order units will be released in February 2016. However, Lim predicts that resale transactions will likely increase from March to May, and on the whole, transaction volumes should be comparable to that in 2015.

(Source: Business Times)

JLL predicts that home prices may fall by 4% to 6% quarter-on-quarter

Based on past correlation studies with the stock market, JLL predicts that the residential property prices may slip by 4% to 6% a quarter. Market experts believe that recent declines in the domestic stock market could signal further price corrections. Chua Yang Liang from JLL said that stability of the property market may be threatened by fluctuations in the stock market. Chua added that this may prompt the government to relook its property cooling measures. Citing the property bubble burst in Asia in 1998, JLL said that stock market losses, rising interest rates, a credit crunch and also unemployment had lowered property prices by 35 to 44% then. JLL added that it expects the ongoing volatility in the stock market to persist.

(Source: Business Times)

Singapore more cost competitive than London and Sydney for luxury home purchases

According to the Global Tax report by Knight Frank and Ernst & Young, Singapore is still cost competitive compared to London and Sydney for luxury home purchases despite having an additional buyer’s stamp duty (ABSD) of 15% on foreign property buyers. This is particularly so for foreign buyers who purchase properties worth US$10 million, and will hold the property for 5 years before selling it. However, for a US$1 million property, Singapore’s tax costs for a foreigner buying, holding and selling it over the same period is higher compared to Sydney and London. According to Alice Tan from Knight Frank, the ABSD is a key deterrent to foreign buyers in the luxury home market. In 2015, only 12.5% of private home purchases in the Core Central Region were made by foreigners, she added. According to the URA, prices of non-landed private homes in the Core Central Region had fallen by 2.5% in 2015, following a 4.1% drop in 2014. As at end-2015, 26% of the 25,000 unsold inventory in Singapore was located in the Core Central Region. Tan said that as the unsold inventory pares down, and supply of homes in the Outside Central Region increases, the demand for luxury homes will surge. Given the current stock market and also economy, Tan believes that the government may need to tweak current cooling measures in order to be more sensitive to the market.

(Source: Business Times)

Commercial

Strata commercial property deals likely to remain tepid in 2016

According to the Business Times, strata commercial property transactions are expected to remain tepid this year due to high vacancies and waning rents. In 2015, the number of strata office transactions fell to 227 units which totalled $758 million. This was down from the 517 deals totalling $1.68 billion in 2014. Strata retail transactions also fell to 221 deals worth $393.7 million in 2015 from the 475 deals totalling $918.6 million in 2014. Since 2009, the number of transactions made for strata office space was the lowest in 2015. Mary Sai from Knight Frank said that as the economy slows down, demand for strata office and retail units is expected to fall further in H1 this year. Buyers are also wary of the high vacancies in the recently completed strata commercial developments. However, in 2015, strata offices sold at an average of $2,439.24 psf, which was 8.1% higher than in the previous year. On the other hand, the average price for strata retail units had fallen by 16% year-on-year to $2,958.84 psf in 2015. Nonetheless, Galven Tan from CBRE said that demand may still pick up if sellers readjust their pricing strategies. Particularly, the proportion of Singaporeans buying strata-titled offices had increased from 18% in H1 2015 to 31.8% in H2 2015. Knight Frank believes that the increase in Singapore buyers is likely to be due to lower prices.

(Source: Business Times)