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Thread: Property Market 2014

  1. #1
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    Default Property Market 2014


  2. #2
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    Implement 6% GST on 1 Apr 2015

    • Locals adopt panic buying - higher demand for properties
    • Developers pricing in inflation - higher launch prices
    • Developers accumulating land bank - higher land prices

    Raise floor prices to RM1m/unit from current RM500k/unit for foreign buyers, higher RPGT of 30% and 2% state levy on SPA on 1 May 2014
    • Foreigners pushing ahead buying decision - more genuine demand and less speculation
    • Sellers pushing up prices to cover higher tax - COV will become more common for sellers/buyers to lower taxation
    • Developers focusing more on premium properties above RM$1mil/unit - Lesser supply and higher prices of good sub-RM$1mil landed properties

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    Some TCSS from my scan of the ground situation in Johor

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    The challenging times are nearly over from Budget 2014 announcements in Oct 2013, and a clearer picture is emerging.

    If you are buying into Johor for own use, I recommend to buy freehold gated and guarded landed properties near 1st and 2nd links. The upward price momentum and stability are still very good.

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    Why I think freehold gated and guarded landed properties > 2000 sqft built-up with 22x75 land size could command a premium in next 5-10 years near 1st and 2nd links.

    Sub-800 sq ft units' share of new sales hits record
    Spike is due to 500-800 sq ft units, not shoebox units
    BY KALPANA RASHIWALA
    [email protected]
    PUBLISHED MARCH 25, 2014

    [SINGAPORE] Small units of up to 800 square feet made up a record proportion, 47.6 per cent, of non-landed private homes sold by developers last year. This was up from 43.4 per cent a year earlier.

    A caveats analysis by CBRE found that the over 40 per cent share started in 2011.

    "This is a function of supply," said CBRE Research associate director Desmond Sim, "as developers have been reducing unit sizes to keep the absolute price quantum affordable to buyers especially investors, who have been slapped with successively tighter loan limits in recent years."

    The spike in small units' share, however, is not due to the so-called shoebox apartments (below 500 sq ft) but to 500-800 sq ft units.

    The property consulting group's analysis - which excluded executive condos, a public-private housing hybrid - found that 500-800 sq ft units' proportion has increased steadily to 34.4 per cent last year, from 29.7 per cent in 2012, 25.9 per cent in 2011 and 18.9 per cent in 2010.

    This reflects the trend of developers minting more compact two- and three-bedders in a bid to keep absolute price quantums within buyers' reach - despite higher per square foot prices.

    Meanwhile, the share of shoebox units dropped to 13.2 per cent last year, from 13.8 per cent in 2012 and the high of 15.1 per cent in 2011.

    Analysts attribute this partly to an Urban Redevelopment Authority cap, effective Nov 4, 2012, on the number of homes in new non-landed residential projects Outside the Central Area, based on an average unit size of 70 square metres (753.47 sq ft) gross floor area.

    The growing share of small homes in the past few years is also reflected in a contraction in median unit sizes - the figure has shrunk 30.6 per cent to 829 sq ft last year from 1,195 sq ft in 2009. Over the same period, the median per square foot price increased 47.2 per cent to $1,354 from $920, while the median lumpsum unit price rose 12 per cent to $1.08 million from $965,000.

    Market watchers note that the end of the global financial crisis was marked by an era of unprecedented money-printing by governments in many parts of the world, creating a surge of global liquidity and low interest rates.

    This has resulted in investors snapping up properties in many markets - including Singapore, driving up suburban condo prices.

    To counter this, some developers began building a higher ratio of small units to keep lumpsum prices affordable and widen the pool of potential buyers.

    Developers have also found that small units help investors overcome the lower loan-to-value limits introduced for those with at least one existing home mortgage and seeking to buy more residential properties.

    And with the Total Debt Servicing Ratio framework rolled out last June, financial institutions are required, when granting property loans to individuals, to cap a borrower's total monthly debt obligations to no more than 60 per cent of gross monthly income.

    "Thus, it has become increasingly difficult for potential homebuyers to obtain a loan, if they do not have enough cash," noted Mr Sim.

    Developers told BT that in 2009, after the global crisis, they were building two-bedroom apartments of typically around 900-950 sq ft. This has shrunk to 700-750 sq ft compact two-bedders today. Over the same period, three-bedroom units have been compressed from 1,100-1,150 sq ft to around 950 sq ft.

    Frasers Centrepoint Homes CEO Cheang Kok Kheong said that demand for compact units comes from young couples to baby boomers/retirees. "Most buyers still want the master bedroom and kitchen to be sufficiently sized. We're also seeing creative storage solutions - for instance, above wardrobes, near the ceiling (by moving air-con pipes to the side) and insertion of linen storage areas along the corridor between the living room and bedrooms."

    Looking ahead, Mr Sim said that in light of reduced spending power of buyers post-TDSR, developers are likely to stick to the strategy of carving out a high ratio of affordable homes. "Hence, we will continue to see small-format homes making up a high proportion of new home sales."

    Mr Cheang reckoned that if more study/library space is provided as part of a development's common facilities, compact apartment sizes could potentially be trimmed a further 5-10 per cent. "But we've not done that because our customers are not ready."

    Agreeing, another developer said that unit sizes are unlikely to shrink further for the time being. "However, the proportion of developer sales in the sub-800 sq ft category may still go up because TDSR has reduced loan availability and the still-high property prices force buyers to look at compact units to keep within their budget."

    Honey, I shrunk the kids
    http://www.businesstimes.com.sg/site...04_1013948.pdf

    Unit sizes shrinking, $ psf prices rising
    http://www.businesstimes.com.sg/site...LL_1014116.pdf

    http://www.businesstimes.com.sg/prem...ecord-20140325

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    Johor investors to face problems
    Mar 25, 2014 - PropertyGuru.com.sg

    Singapore speculators who were banking on making a quick profit from buying property in Johor, Malaysia, are likely to run into difficulties when the new RM1 million (approx. S$385,200) limit for foreign property purchases comes into effect on May 1.

    Many Singaporeans have been investing in property across the causeway in recent years, attracted by comparatively low prices. However, those who need to exit their investments quickly are likely to face significant challenges when trying to sell their property – and could ultimately be stuck with a property they cannot sell.

    From May 1, foreign property owners including Singaporeans who reportedly account for as much as 70 percent of property purchases in some parts of Johor state, will only be able to sell their units to other overseas buyers at prices above RM1 million. They can sell to Malaysians below that price, however Malaysian buyers of resale new and yet-to-be-completed units are extremely few and far between.

    Ryan Khoo, a long time investor in Malaysian property and author of the best-selling What’s the Big Deal with Iskandar book, told PropertyGuru: “I do believe there are a significant number of buyers who have bought at levels below RM1 million and are potentially "stuck", but the impact to these buyers is not really being felt now because most of these are newer properties still under construction and with DIBS in place, so there is no urgent need to sell yet.”

    DIBS (Developer Interest Bearing Scheme) is where the developer pays interest payments on the buyers’ loans during the construction period. Normally the buyer pays a down payment or deposit and legal fees, but nothing else until completion.

    Khoo added: “The common mistake that most Singaporean investors have made in Iskandar is buying property that is too expensive for locals - though cheap for Singaporeans - and yet not in a prime enough location, not a good enough design, and not in a good enough environment where there will be enough foreign buyers to take up these properties in the future.”

    He noted that overseas investors who have purchased property below RM1 million in Medini are largely safe from potential sales challenges due to favourable pricing and exemptions from the RM1 million foreign buying limit there. Another sector he predicted that will see benefits from the new rules is the gated, guarded landed homes market.

    “Foreign buyers will realise they might as well buy these types of properties instead of condos if they are going to spend RM1 million,” he said.

    Going forward, he believes that sales volumes will moderate and buying will be very selective, as buyers have a lot of choices and will gravitate to projects that have a strong product proposition.

    He said: “The new rulings will help to moderate the Iskandar property market in the medium term, which is healthy for the market overall. Savvy investors will still find Iskandar an attractive investment, and will still invest for capital gains in the medium- to long-term, especially since most of the catalyst projects are underway and, as each of them progresses, the market will receive a boost in the years to come.”

    Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email [email protected]

    http://www.propertyguru.com.sg/prope...-face-problems

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