Q2 property prices up on suburban condo sales

[reporter2]

http://www.straitstimes.com/archive/...sales-20130702

Q2 property prices up on suburban condo sales

Cooling measures seemed to have hit luxury segment instead, say analysts

Published on Jul 02, 2013

By Melissa Tan


RED-HOT demand for suburban homes helped drive up overall property prices in the second quarter.

Values across the market were up 0.8 per cent in the three months to June 30, following a 0.6 per cent rise in the previous quarter.

The unexpectedly strong increase may have been behind Friday's measures to rein in mortgage lending.

Analysts said the flash estimates from the Urban Redevelopment Authority (URA) released yesterday suggest that January's tough cooling measures have hit the luxury segment rather than the suburban market.

Prices for mass-market suburban apartments jumped 3 per cent from the preceding quarter - more than twice the 1.4 per cent increase recorded in the three months to March 31 compared with the final three months of last year.

"Pricing for suburban homes has continued to be optimistic with demand remaining firm in spite of an array of cooling measures being in place," said Jones Lang LaSalle national director Ong Teck Hui.

CBRE executive director for residential Joseph Tan said suburban homes accounted for 60 per cent of total transactions in the second quarter.

This was largely a "function of the number of projects with good connectivity that were released by developers in recent months", such as Jade Residences, Midtown Residences and Jewel@Buangkok, Mr Tan said.

City-centre home prices went in the opposite direction, sliding 0.2 per cent in the second quarter after growing 0.6 per cent in the first. Prices in the city fringe rose 0.2 per cent in the second quarter, the same increase recorded in the first three months of the year.

Analysts said suburban homes likely appealed to buyers because they were cheaper.

"With affordability being a key consideration, especially after the imposition of the additional measures in January, buyers continued to be drawn to the relatively more affordable mass-market homes," said PropNex chief executive Mohamed Ismail.

Colliers International research director Chia Siew Chuin said demand was also boosted by buyers who had been acquiring their second or subsequent property in their child's name to avoid paying the additional buyer's stamp duty (ABSD).

However, this practice looks likely to end after the Monetary Authority of Singapore moved on Friday to plug the loophole. A standardised total debt servicing ratio (TDSR) framework for banks to assess a person's ability to borrow has also been established.

Mr Ong said the rise in overall private property prices suggested that "the risk of further intervention in the residential market remains high".

"The effect of the TDSR will be closely monitored and if the market does not moderate sufficiently, further cooling measures may be expected.

It also sends the signal that notwithstanding tapering of liquidity and eventual interest rate increase, the residential property market will still be tightly managed," he added.

[email protected]

[reporter2]

http://www.businesstimes.com.sg/arch...sneak-20130702

Published July 02, 2013

Private home prices sneak up

Pricing seen as flat for new launches; MAS rules could hit 10-20% of buyers

By Kalpana Rashiwala


[SINGAPORE] The Urban Redevelopment Authority's second quarter flash estimates showed that its benchmark private home price index rose 0.8 per cent from Q1, supported by a 3 per cent escalation in prices of non-landed homes in suburban areas. This compares with respective increases of 0.6 per cent and 1.4 per cent in Q1.

Property consultants and analysts seem loath to forecast price drops in the near future despite predicting a decrease in the number of transactions for private homes after Friday's rollout of standardised guidelines for financial institutions to implement a total debt servicing ratio (TDSR) not exceeding 60 per cent of a borrower's gross monthly income, when granting property loans.

At the same time, the Monetary Authority of Singapore acted to plug some loopholes used to circumvent tighter loan-to-value limits on second and subsequent housing loans and longer-tenure loans.

"As in the past, there'll be a knee-jerk reaction. Showflats were quieter over the weekend," says Ong Choon Fah, chief operating officer at DTZ.

"It will take some time for people to digest not just the latest measures - which some have dubbed the eighth round of property cooling measures since late 2009 - but the cumulative impact of all the earlier rounds," she added.

For developers to reduce prices, sales volumes will have to come down substantially for a sustained period of time, Mrs Ong argues. "For new launches, some developers with sufficient profit margin may price more realistically taking into account current market conditions and the risks of holding stock. But some may face limitations due to the high land prices they've paid."

Agreeing, Knight Frank chairman Tan Tiong Cheng said: "The problem is there are too many developers bidding for land at state tenders. Some of the bids have been so high they leave no profit margin based on current pricing."

Observers say the pool of non-traditional developers bidding at tenders has been expanding again lately to include some new players from China.

Mr Tan foresees flat prices in per square foot terms for new launches in a best-case scenario. "It would be challenging to raise prices," he said.

Orange Tee's research and consultancy head Christine Li argues that developers have enjoyed "absolute pricing power", being able to launch new projects at higher prices than neighbouring projects sold within the last two years because penal seller's stamp duty rates have effectively ensured they do not face competition in the form of flipping of units in earlier projects. "Barring external shocks, developers should be able to continue this strategy," she added.

However, Colliers International director Chia Siew Chuin suggests that towards the year-end, overall private home prices could see marginal downside.

In a research report yesterday, Standard Chartered said its on-the-ground check showed the MAS announcements could affect some 10-20 per cent of buyers at new launches.

Morgan Stanley estimates the 3.5 per cent medium-term interest rate floor assumption for housing loan applications under the TDSR framework results in borrowers having access to a 20 per cent lower loan quantum on the same income. "This could curb demand from the marginal property buyer who has to now look at a 20 per cent cheaper apartment, or fork out 20 per cent more cash in downpayment."

A Citi report suggests that to continue hitting the "sweet spot" in terms of absolute affordability of buyers, developers could continue to shrink unit sizes. Effective Nov 4 last year, URA has capped the number of homes in new non-landed private housing developments outside the Central Area based on an average unit size of 70 sq metres gross floor area.

"Our analysis shows that most projects launched this year have average unit sizes between 80 and 90 sq m," said Citi.

Property consultants attribute the 3 per cent escalation in URA's Q2 flash estimate for its price index for non-landed private homes in Outside Central Region (OCR) to new launches at relatively high prices - including Midtown Residences, Jade Residences and Spazio@Kovan. The Q2 index was up 9.4 per cent year on year.

Going by CBRE's analysis of caveats lodged for developers' sales of non-landed homes in OCR, the median price rose from $1,083 per square foot in Q1 this year to $1,185 psf in Q2. However, the median quantum per unit eased from $940,000 to $924,000, showing that absolute prices have remained affordable - due to a reduction in the median unit size from 88 sq m (about 947 sq ft) to 72 sq m (775 sq ft).

Analysts note that the Q2 flash estimate does not even factor sales evidence from last Friday's sellout of the 738-unit J Gateway at an average price of nearly $1,500 psf, a fresh record for the Jurong area. This could mean the final Q2 stats URA will release on July 26 could reflect an even bigger price hike in OCR.

URA's non-landed private home price index in Core Central Region (where the choicest homes are located, covering the prime districts 9, 10 and 11 as well as the financial district and Sentosa Cove) dipped 0.2 per cent q-on-q in Q2 - contrasting with a 0.6 per cent increase in the previous quarter. In Rest of Central Region (which covers city-fringe locations like Bishan, Potong Pasir, Toa Payoh, Balestier and Bukit Merah), the Q2 flash estimate reflects a 0.2 per cent q-on-q rise, identical to the Q1 performance.

URA's benchmark overall private home price index for Q2 was 3.9 per cent higher year-on-year.

[radha08]

more cm

[teddybear]

They already told you TDSR and other new rules are not CM already lah because somebody said will not have any more CM in near future! Why you still so iron-teeth and still saying this is CM? You want to make them lose face is it? Wait they censured you then you know!

more cm

[VS]

They already told you TDSR and other new rules are not CM already lah because somebody said will not have any more CM in near future! Why you still so iron-teeth and still saying this is CM? You want to make them lose face is it? Wait they censured you then you know!

ya ya, just like "not flood, just pond" saga.

[hyenergix]

They already told you TDSR and other new rules are not CM already lah because somebody said will not have any more CM in near future! Why you still so iron-teeth and still saying this is CM? You want to make them lose face is it? Wait they censured you then you know!

A lot less drastic than previous rounds. More like to plug loop-holes of the previous rounds of cooling measure.

[mcmlxxvi]

They already told you TDSR and other new rules are not CM already lah because somebody said will not have any more CM in near future! Why you still so iron-teeth and still saying this is CM? You want to make them lose face is it? Wait they censured you then you know!

This cm stands for Control Measure.

[jslee78]

A lot of singaporean gets rich via property investment. The lastest measure by MAS has increased the entry level, making property investment belongs to those who have extra cash. (Lucky for those marginal player who manage to squeeze in.) MAS has the intention to make this measure permanent, as a mean to stablise the price movement of the property market. Will increasing the entry level for singaporean able to stablise the spore property market?

[mermaid]

They already told you TDSR and other new rules are not CM already lah because somebody said will not have any more CM in near future! Why you still so iron-teeth and still saying this is CM? You want to make them lose face is it? Wait they censured you then you know!

in accounting there is a term called substance over form u noe! bo ko leng MAS dunno tis terminology de mah!