Bishan HDB maisonette sold for $1.09m in October, setting new record - SRX

SINGAPORE - The property market may be on the downtrend, but that did not stop a Housing Board maisonette in Bishan from fetching an auspicious $1,088,888 on the resale market in October and setting a new record.

The 150 sq m unit is located between the 22nd and 24th storeys of Block 194 at Bishan Street 31, near Bishan MRT.

Rare executive maisonette units in Bishan frequently fetch high prices.

The previous record price of $1.05 million was set in December 2013 by one such unit, a 150 sq m maisonette on the 20th floor of Block 190 at Bishan Street 31. Another maisonette in the same block has just sold for $1 million this December.

These remarkable deals took place even as overall prices in the HDB resale market have been sliding.

In November, HDB resale prices fell for the 10th month in a row to hit a 40-month low, according to Singapore Real Estate Exchange figures. Since the previous peak in April 2013, resale prices have fallen 9.8 per cent.

posted on 23 Dec 2014 

Straits Times

By Janice Heng

Source: SRX (23 Dec 2014)

Bishan exec maisonette sold for $1.08 million despite cooling measures - AsiaOne

SINGAPORE - Even with the Government's cooling measures to curb rising home prices, an executive maisonette in Bishan has fetched a princely sum of $1,088,888 - with an ideal location and nearby amenities.

The auspicious-sounding figure was sealed in a deal in October, according to local media reports.

The high-floor two-storey unit is located in a 27-year-old apartment block - Block 194 in Bishan Street 13. It is a minute's walk away from a supermarket and a 24-hour food centre.

Lianhe Wanbao said that another unit in the same block also made headlines for fetching $1.01 million in February last year.

Mr Huang, a sales director of a property agency, said that such high prices should not be seen as the norm for public housing.

He said that these million-dollar public homes does have their own selling points, such as ideal locations, but they could have also been through rounds of renovation to increase their value.

With amenities such as a community centre with a large Starbucks, a public library, a shopping centre, MRT and bus interchange, as well as a sports stadium all within walking distance, it comes as no surprise that flats in Bishan can fetch for an average of $513psf.

Property prices in the central region of Bishan, Braddell, Toa Payoh can also be priced from $1,365psf to $1,175psf. The MRT map reveals the highest cost of property value compiled across all home types in their specific regions.

wjeanne@sph.com.sg

Source: AsiaOne (22 Dec 2014)

UOB launches online mortgage calculator to help property buyers - AsiaOne

SINGAPORE - Potential property buyers will now have a service to inform them about how much a property loan they can take with United Overseas Bank's (UOB) new online property loan calculator.

Source: Internet Screen Snap

The calculator, launched by UOB on Thursday, allows potential buyers to determine their total debt servicing ratio (TDSR) for their mortgage loan applications.

In a press release, UOB said that one in three homebuyers surveyed were unaware or did not understand the Monetary Auhotrity of Singapore's (MAS) TDSR criteria for property loans.

Under the TDSR framework, customers can only be granted property loans if their total debt servicing ratio was 60 per cent or lower.

UOB's TDSR calculator covers loans to purchase and to re-finance properties across all property types, including private residences, Housing Board (HDB) flats, international and commercial properties.

Ms Chia Siew Cheng, head of secured loans, UOB Group, said: "Our aim is to make it easier for our customers to understand their personal financial situation, and for them to be able to make informed decisions about purchasing or refinancing a property."

According to UOB, one in two survey respondents prefer to use online calculators to find out how much they can borrow before sending their applications to a mortgage banker.

UOB's TDSR calculator can evaluate up to four borrowers' mortgage servicing ratio (MSR), or the proportion of monthly gross income spent on mortgage repayments, and also offers the option for customers to pledge their financial assets as additional income streams for detailed mortage analysis.

Says Ms Chia, "Buying a property is a long-term commitment. When someone decides to buy a property, they should be clear about the costs and terms of their home loans."

She added that buyers should also set aside sufficient funds to manage potential rising interest rates and other unforeseen circumstances.

UOB's TDSR calculator is a free service available at www.uob.com.sg/TDSR. Results from the calculator are displayed onscreen, and customers do not have to leave their contact details.

seanyap@sph.com.sg

Source: AsiaOne (18 Dec 2014)

More BTO flats push HDB resale prices down: SRX - AsiaOne

HDB resale prices hit a 40-month low last month, according to data compiled by SRX Property. Prices dropped by 0.8 per cent in November, compared to the previous month. 

This is a 6.3 per cent drop from last November, and 9.8 per cent decrease since its peak in April 2013.

1,350 HDB resale flats were sold in November, a 13.1 per cent decrease from 1,553 transacted units in October. Although resale volume increased by 11.4 per cent year-on-year, it is down 63.0 per cent compared to its peak of 3,649 units in May 2010.

Overall Median T-O-X was negative $3,000 in November 2014. Geylang posted the highest median T-O-X at $8,000, followed by Queenstown at $7,500 and Toa Payoh at $3,500.

In May 2013, one month before the government introduced Total Debt Servicing Ratio (TDSR), National Development Minister Khaw Boon Wan told participants at an Our Singapore Conversation dialogue on housing, "If housing prices keep rising, it won't be good. If we can maintain them or even lower them by a few per cent, for example 5 per cent, that's good. When I came into MND, that was my target."

"HDB prices have declined more than that of private resale flats because the government has been able to change both supply and demand in the HDB market whereas it has only changed demand on the private resale side," said Jeremy Lee, Chief Technology officer of SRX Property.

"From this year to 2016, MND expects 6,000 HDB upgraders to take the keys to their BTO flats each year. This number is twice that of last year. The upgraders must sell their existing HDB flats within six months of getting their BTO keys. The net result is that there is more supply in the HDB resale market. More supply puts downward pressure on prices," explained Mr Lee.

"There is a second way BTOs impact prices of HDBs. The government decoupled BTO pricing from the resale market resulting in lower BTO prices. As such, the BTO policy accomplishes two things. It introduces more units at below market price. This causes the price decline in the HDB resale market to outpace that of the private resale market."

The drop in prices spells good news for HDB buyers.

"HDBs are becoming more affordable thanks to the cooling measures and the increase in supply. A large percentage of Built-to-Order flats will be coming into the market, which will cause resale flats to have a downward pressure on their pricing," said Tim Seow, associate marketing director of GPS, "Furthermore, the very low interest rate means it is historically inexpensive for you to finance your home."

"Take advantage of the cooling measures to negotiate a discount, recognising that in the long run it is in everyone's interest for your home to appreciate and give you good returns," he added.

Source: AsiaOne (11 Dec 2014)

Private rents drop for 10th consecutive month on declining volume in November - SRX

A. Non-Landed Private Residential Rental Market

1. Private rents continued to fall. According to the SRX Property Price Index for Non-landed Private Residential Rentals, rents posted a drop of 0.8% in November compared to October. Non-landed Private Residential units in all three sectors (CCR, RCR and OCR) saw decrease in rents of 0.3%, 0.7% and 1.2% respectively.

• November marks the 10th consecutive monthly fall in rents.
• Rents have declined 5.7% since the start of the year.
• Year-on-year, rents in November 2014 are down 5.3% from November 2013.
• Rents in November are 9.4% down compared with its peak in January 2013.

2. Rental volume dropped. An estimated 2,892 Non-landed Private Residential units were rented in November 2014. This is a 11.0% decrease from 3,251 units rented in October 2014.

• Year-on-year, rental volume in October 2014 is 9.8% higher compared to 2,633 units rented in November 2013.

B. HDB Rental Market

1. HDB rents continued to fall. According to the SRX Property Price Index for HDB Rentals, rents posted a decline of 0.1% in November compared to October. HDB 3 and 5-room flats posted declines in rent by 0.2% and 1.0% respectively. 4 room flats rents levelled at 0% in October, while Executive flats saw a pick-up in rents by 3.5%.

• Year-on-year, rents in November 2014 are down 2.2% from November 2013.
• Rents in November are 4.1% down compared with its peak in August 2013.

Source: SRX (10 Dec 2014)

Revision of HDB Resale Price Index (RPI) - HDB

The Resale Price Index (RPI) provides the general price trend of resale HDB flats. The index computation methodology was last revised in 2002. Since then, the variety of resale flats, e.g. design, age, location, which has been transacted in the resale market has increased. It is therefore timely to update the computation methodology of the RPI. From the 4th quarter 2014, HDB will update the computation methodology of the RPI by:

i) Adopting the Stratified Hedonic Regression Method;

ii) Switching to 5-quarter fixed weights; and
iii) Adopting a new base period of 1Q2009.

New Stratified Hedonic Regression Method

2Currently, the RPI is computed using the stratification method, with a representative basket of towns and flat models. Resale prices are stratified into segments based on flat types, models and regions. The average prices for each segment are then aggregated using 12-quarter moving average weights to derive the index.

3With effect from the 4th quarter 2014, HDB will adopt the stratified hedonic regression method to compute the RPI. This method will control for variations in flat attributes, such as proximity to amenities, age and floor level, through a hedonic regression, to derive the general price movements in each segment. These are then aggregated using 5-quarter capital value fixed weights to derive the aggregate price change. To better reflect prevailing market structure, the weights will be updated once every three years. Please see Annex  (PDF 218KB) for the graphical illustration.

Updated Base Period

4Along with these changes, the base period will be updated to 1Q2009, from 4Q1998. This means that the RPI for 1Q2009 will be at 100. The current RPI series from 1Q1990 to 3Q2014 will be re-scaled to the new base period of 1Q2009. This adjustment will only impact the absolute levels of the index (see Table 1 and Chart 1), and the quarterly percentage changes will remain unchanged.

Table 1: Comparison of Current and Rebased RPIs

Quarter	Current RPI (4Q1998=100)	Current RPI (Rebased to 1Q2009=100)
Previous base 4Q1998	100	72.3
New base 1Q2009	138.3	100
2Q2009	140.2	101.4
3Q2009	145.2	105.0
4Q2009	150.8	109.0
1Q2010	155.0	112.1
2Q2010	161.3	116.6
3Q2010	167.8	121.3
4Q2010	172.0	124.4
1Q2011	174.8	126.4
2Q2011	180.3	130.4
3Q2011	187.2	135.4
4Q2011	190.4	137.7
1Q2012	191.6	138.5
2Q2012	194.0	140.3
3Q2012	197.9	143.1
4Q2012	202.9	146.7
1Q2013	205.5	148.6
2Q2013	206.6	149.4
3Q2013	204.8	148.1
4Q2013	201.7	145.8
1Q2014	198.5	143.5
2Q2014	195.7	141.5
3Q2014	192.4	139.1

Note: The re-scaling uses a factor of 100 (new index in 1Q2009) / 138.3 (original index in 1Q2009) multiplied on the original index level to derive the re-based index level for the respective quarters. Indices from 1Q1990 to 4Q2008 will be similarly re-scaled using the same factor. Due to rounding, there could be some differences in the quarterly price change compared to the RPI series before re-scaling.

Chart 1: Rebased RPI (1Q2009=100)  (JPG 1152KB)

5Back-testing of the index using the new method on 2014 data shows that there is no change in trend, and the quarterly changes follow closely to those computed using the current method (Table 2).

Table 2: Back-testing of RPI Based on Current Method and Revised Method

Time Period	Current RPI	Revised RPI
1Q2014	-1.6%	-1.9%
2Q2014	-1.4%	-1.5%
3Q2014	-1.7%	-1.8%

6The stratified hedonic regression methodology will be adopted from the next index release, i.e. the release of the flash estimate of 4Q2014 RPI in Jan 2015.

Source: HDB (09 Dec 2014)

Private Resale Market Continues to Stall with Mixed Results for Buyers & Sellers - SRX

Prices dropped on low volume but sales in November 2014 were 6.6% higher than sales in 2013.  On top of that, the median Transactions-over-X Value (T-O-X) improved to zero.

Analysis summary:

"When sales volume is this low, macro-analysis becomes less relevant and individual transactions are more pronounced," said Sam Baker, CEO and co-founder of SRX Property. "On the macro level, we can project, with reasonable certainty, that demand will continue to be anemic and prices will be relatively stubborn until there is a significant change to Cooling Measures, interest rates, supply, or an external shock, or some combination of the above.   Until then, the action is at the street level and requires micro-analysis.  50% of buyers in November paid above the X-Value for their unit and 50% paid below it.  This means that not all buyers and sellers are being impacted by the Cooling Measures in the same way.  A good percentage of expert agents and clients are using data to transact the right home at the right price in their particular project or street." 

Observations:

1. Non-landed Private Residential Resale prices slipped by 1.1%. Non-landed Private Residential Resale prices decreased 1.1% in November compared to October 2014.  Prices dropped by 1.3% in RCR and OCR, while CCR saw a slight price drop of 0.1%.

          According to the SRX Non-landed Private Residential Price Index:

• Prices, on low volume, pushed below the support level established since Jul 2014 
• Year-on-year, prices have dropped 3.4% from November 2013;
• Prices have declined 6.3% since the recent peak in Jan 2014.
• The revised index for October remains unchanged at 0.4% price increase compared to September.

2. Resale volume shrank by 22.4%. According to SRX Non-landed Private Residential Resale data compiled by SRX Property, an estimated 388 Non-landed Private Residential units were resold in November, a 22.4% decrease from 500 transacted units in October.

• Year-on-year, resale volume was 6.6% higher compared with 364 units resold in November 2013;
• Resale volume is down 81.1% compared to its peak of 2,050 units resold in April 2010.

3. Overall median Transaction Over X-Value (T-O-X) reached zero. According to SRX Property, the median T-O-X for Non-landed Private Residential reached a neutral level in November. The  median T-O-X for Non-landed Private Residential measures whether people are overpaying or underpaying the SRX Property X-Value estimated market value.

• The median T-O-X was $0 in November 2014;
• This is the first time non-negative median T-O-X is reported since Oct 2013.

4. Districts 9, 22 and 11 posted high median T-O-X. For districts with more than 10 resale transactions in November 2014, district 9 had the highest median T-O-X of $80,000, followed by $30,000 in district 22 and $15,000 in district 11.

      This means that majority of the buyers in these districts has purchased units above the computer-generated market value.

5. Among relatively active districts, District 5 posts the most Negative median T-O-X. Among districts  with more than 10 resale transactions, the lowest median T-O-X was in district 5 with T-O-X of NEGATIVE $40,000, followed by NEGATIVE $20,000 in district 16, and NEGATIVE $15,000 at district 19. 

      This means that majority of the buyers in these districts has purchased units below the computer-generated market value.

Source: SRX (09 Dec 2014)

Condo rents to drop by up to 10%: ANZ - AsiaOne

VACANCIES in the private residential market are set to inch up over the next few years as a supply glut looms, and this would exert further downward pressure on rents and, hence, investment returns.

ANZ Bank flagged in a report on Friday that Singapore's population growth is not enough to absorb the new housing supply between 2014 and 2017, with record completions of new homes posing a "supply shock".

Daniel Wilson, economist for ASEAN and Pacific at ANZ Bank, said that he expects non-landed property rents to fall cumulatively by up to 10 per cent by the end of next year, given the time lag between changes in vacancies and rents.

Rising interest rates pose a second headwind, he added, warning that a potential 100-basis point hike in interest rates next year could trigger a sharper fall in rents.

Vacancy rates in the first three quarters of this year have already outpaced the bank's expectations.

Data from the Urban Redevelopment Authority (URA) showed that private residential rents sank by a deeper 0.8 per cent in the third quarter, after a 0.6 per cent decline in the preceding quarter; the data showed overall private home prices slipped 0.7 per cent in the third quarter.

The vacancy rate of private homes rose to 7.1 per cent in the second and third quarters, the first since 2006 that it has exceeded 7 per cent, with the vacancy rate for non-landed private homes already exceeding 8 per cent in the second and third quarters.

Mr Wilson said that a vacancy rate of 7.5-8.5 per cent is deemed the tipping point at which "intensified downward pressure on property rents manifests itself". But the overall vacancy rate for private homes could rise to a higher 8.5-9.0 per cent over the next two years, he projected. "Though the supply pipeline is well-anticipated, its impact has not been tested," he said.

About 80,000 units are in the supply pipeline - including units under construction and planned development - way above the long-term average of about 60,000 units. Some 80 per cent of these units are already under construction and many will be hitting the market over the next few years, according to Mr Wilson.

URA's third quarter statistics showed that some 20,852 private condos and executive condos will be completed in 2014, significantly higher than the 13,150 units completed in 2013. Another 23,769 units are expected to be completed next year.

ANZ expects new completions of private condos to peak in 2016, nearly 2.5 times the long-term average.

Even by assuming that the population size of Singapore will grow to 5.9 million in 2020 with slightly over 80 per cent of the households staying in HDB flats and the rest staying in private homes, the population growth is not sufficient to absorb the new supply, he warned.

Meanwhile, the economist expects any decline in property prices to be more muted relative to the decline in rents, as developers are easing prices modestly to move inventory rather than undertake any fire sale.

If the 80th percentile of the median resident household income is used as a proxy (since 80 per cent of the resident population live in HDB flats), "prices have not grown too fast", Mr Wilson argued.

This article was first published on Dec 6, 2014. 

Monday, Dec 08, 2014

Lynette Khoo

The Business Times

Source: AsiaOne (08 Dec 2014)

HDB to revise resale price index - AsiaOne

The Resale Price Index (RPI) for HDB flats will be revised to reflect changing market conditions, said Minister for National Development Khaw Boon Wan in his blog Wednesday.

Here is the full statement from Mr Khaw Boon Wan's blog:

In Singapore, property price movements are closely watched and commented upon. With more than 90 per cent of Singaporeans being home owners, the state of the property market, especially the housing market, is of strong interest to all. This is particularly so in the HDB resale market.

When resale prices shoot up continuously, buyers or potential buyers are anxious. When resale prices continue to moderate, the table is turned and sellers or potential sellers become nervous.

At one NTUC Dialogue, Secretary -General Lim Swee Say, in jest, asked me if I could create two housing markets in Singapore, a market for buyers where prices continue to fall, and a separate market for sellers where prices continue to rise. The audience had a good laugh!

Managing the property market is therefore both an art and a science: projecting and ensuring a good matching of supply and demand, while correctly sensing the mood takes some skills and good luck.

The science part of the skills requires a good property price index. For the HDB resale market, we currently have the Resale Price Index (RPI) which HDB publishes every quarter. The index gives a general sense of resale price movements and serves as a useful reference point for home buyers and sellers in their decision-making.

To construct the RPI, HDB takes the average resale flat prices for a representative basket, by flat types, flat models and region, based on actual resale flat transactions. The average resale flat prices for each segment are then aggregated to derive the index.

To be effective and representative, RPI must reflect the prevailing resale market. In recent years, the HDB resale market has actually evolved considerably. First, we now see a wider range of flats, differing in designs and attributes.

For example, newer flat models, including taller blocks, are increasingly being transacted in the resale market. We have also reintroduced 3-room flats since 2004, after the current RPI was last revised.

Second, there are now a lot more resale transactions for flats in newer towns, such as Punggol, Sengkang and Sembawang, but these towns are not included in the representative basket currently. In other words, the current RPI does not capture movements in resale flat prices in these towns.

Third, unlike the past, there is now greater variance in the age profile of flats being transacted in the resale market. Such variance must be taken into account in making price comparisons.

With these significant changes in the HDB resale market, the current RPI may not adequately reflect the resale market. It is therefore timely to review the RPI methodology to better capture price changes over time, and control for the variations in attributes of the resale flats transacted.

This will allow the index to continue serving its purpose of providing timely and reliable information on the resale market movements.

Indeed, HDB has been working with a consultant from the NUS Department of Real Estate to review the RPI computation methodology. The review has recently been completed. HDB will be sharing more details soon.

Wednesday, Dec 03, 2014

The Straits Times

Source: AsiaOne (03 Dec 2014)

Singapore private home sales up 18% in October - Channel NewsAsia

Property developers sold 765 new private homes last month, up from the 648 units sold in September, according to the Urban Redevelopment Authority.

SINGAPORE: The private housing market picked up pace in October, with sales of new homes rising 18 per cent from the previous month.

Excluding executive condominiums (ECs), developers sold 765 new units last month, up from the 648 units sold in September, data from the Urban Redevelopment Authority (URA) showed on Monday (Nov 17). Including ECs, 855 units were sold in October, up from 707 units in September.

The improved sales came as more units were launched for sale. A total of 649 units were launched in October, up from the 514 units launched in the previous month.

Sales in October were driven by the newly-launched Marina One Residences. The project sold about 330 units - about half of October's sales volume - at a median price of S$2,228 per square foot (psf).

DEVELOPERS CLEARING EXISTING STOCK

Older projects Coco Palms and Lakeville also managed to clear units without developers having to offer discounts. Coco Palms cleared 34 units at a median price of S$1,039 psf, while Lakeville sold 32 units at a median price of S$1,340 psf.

Marina One Residences was the only new project launched last month, and property watchers said this is a sign that developers are focusing on clearing old stock.

According to URA, there were 19,270 unsold units in the market.

ERA Realty's key executive officer, Eugene Lim, said: "The loan curbs and ABSD (Additional Buyer's Stamp Duty) framework have somewhat dried up buying momentum in the market and developers would prefer to focus on clearing existing stock rather than introduce more new stock into the market."

Developers were also launching their projects in phases, noted Desmond Sim, head of research at CBRE Singapore. He added: "Going forward, developers will be eye-balling each other, timing themselves accordingly by putting slow launches into the market so that it will be slowly absorbed and not overcrowd the market."

However, a further spike in buying activity is expected in November as ECs make a comeback after almost a year. Already, all 546 units at the Lake Life EC have been sold.

- CNA/cy/ac

Source: Channel NewsAsia (17 Nov 2014)

TDSR Running Out of Steam? - SRX

One conclusion that we can draw from the Cooling Measures is that placing limits on borrowing is more effective than levying stamp duty taxes at bringing Singapore property prices down.

According to the SRX Property Index for Private Resale Flats, the first Additional Buyers Stamp Duty (ABSD1) did little to impact both resale volume and prices. 

While the foreign buyer surcharge of 10% discouraged some investment from overseas, diverting money originally destined for Singapore to other international property markets like London and New York, ABSD1 actually spurred the local investment market.

ABSD1 did local investors a favor because it removed some foreign competition for private properties while creating expectations for lower prices.  Singaporeans thought that they could take advantage of the lower demand by foreigners to get a better price.

However, things didn’t go according to plan because of low interest rates.  As a result of the low interest rate environment, property was a much more attractive asset class than cash and bonds.  Furthermore, financing property investments was cheap.

As a result, enough Singaporeans, armed with inexpensive financing and less competition from overseas entered the market, to keep driving prices upward.

Recognizing ABSD1 did little to discourage local demand for private property, the government introduced ABSD2, levying a 15% tax on most foreigners and a 7% stamp duty on Singaporean purchasing a second property.

ABSD2 reduced the resale volume range from 781-1,439 units in 2012, excluding Chinese New Year, to 581-734 range during the first half of 2013, excluding Chinese New Years and January.

ABSD2 didn’t cause a meaningful decline in price because sellers, believing that Cooling Measures would not last forever, were willing to give a little on price but not that much.

Remember, transacting real estate requires a willing buyer and a willing seller.  Sellers knew that the stamp duty taxes had not altered the fundamental value of their homes.  As such, sellers could justify selling at the price plateau – since prices were high and were unlikely to go up.  In enough instances, they resisted going below the price plateau by exiting the market and sitting on the sidelines.

The government clearly recognized the stamp duty taxes, even when applied to Singaporeans, were not doing the trick so it introduced the Total Debt Servicing Ratio (TDSR) in January 2013 in an effort to limit Singaporeans from over-extending themselves with debt.

TDSR worked. 

It took a while but finally private, resale prices capitulated in July 2014 when private resale flat prices declined 5.6 % from their peak. 

Since then, prices have reached a new plateau, bouncing around the 168.8 and 169.8 range of the SRX Price Index for four consecutive months.  (As of October, SRX Property reports that prices have declined 5.2% on a slight increase of 0.4% since September.)

This new plateau suggests a new support level for prices in the private, non-landed market.  In other words, prices seem to be stuck.

In addition, in looking at the SRX Property graph, since March 2014, resale volume seems to have achieved a new equilibriumaround 400 units transacted per month.

This new equilibrium in resale volume, coupled with the price plateau, suggests that the TDSR might have run out of steam in terms of its effectiveness in reducing prices further.

Therefore, for prices to continue to decline, something must be introduced into the equation to alter the market’s dynamics. 

So, the first question, is the government satisfied with a 5% decline?

If not, then what additional policy tools do they have available?

Given that the Cooling Measures have proven that price is a stubborn variable in the property market, if the government wants the price to drop further in the private resale market for non-landed properties, the only way to do this is to increase supply. 

Demand, at its current level, is about as far down as Cooling Measures can push it.

posted on 20 Nov 2014

Source: SRX (20 Nov 2014)