Singapore Property Downcycle

[seletar]

http://www.singaporepropertycycle.co...roperty-cycle/

4 Phases of the Property Cycle

Property markets follow a cyclical pattern, moving from one low point up to the next high point and then back down to the next low point. This cyclical pattern comprises four distinct phases as follows:



Property Downcycle

Falling phase (Slump)
◾Vacancy rates increase
◾Rents fall and at an increasing rate
◾Yields are flat or falling
◾Harder to obtain property finance
◾Interest rates rises
◾Properties taking longer to sell
◾Not uncommon to see properties transacting below valuation
◾Margin calls on property loans by banks
◾Demand wanes and is outstripped by new supply
◾New construction arriving but few new launches by developers
◾Prices falling slowly initially and rapidly towards the end of this phase


Bottoming phase (Stabilisation)
◾Vacancy rates are high
◾Rents flat or falling at slower rate
◾Yields start to improve
◾Property finance is difficult to obtain
◾Properties stay on market a long time
◾Sellers seldom achieve asking price
◾Many distressed sales and banks auction off repossessions
◾Supply ahead of stagnant demand
◾Few new constructions
◾Prices fall rapidly before flattening and bottoming

[seletar]

http://sbr.com.sg/financial-services....D0NjFfBb.dpuf
Published 03 June 2014

Chart of the Day: Singapore banks' rising exposure to property market is a looming doomsday



Household and mortgage loans are trekking north.

Banks are becoming more exposed to property market as buyers turn to them in their plight against the house measures.

According to DBS, the TDSR is one of the macro prudential measures employed by the MAS to curb excessive lending and mitigate the risk exposure of the banking system to the real estate sector.

Here's more from DBS:

Financial institutions are not allowed to extend additional loans to borrowers whose total monthly debt repayments exceed 60% of monthly income.

The aim is to limit consumer leverage and cool demand for loans, particularly large-ticket mortgage loans.

The property market is showing signs of moderation due to the series of cooling measures. This has led some to suggest that the MAS may unwind some of the earlier measures.

We suspect that will not happen soon, as the easing in property prices was the raison d’etre of the cooling measures. Absent a sharp fall in prices and / or rise in negative home equity, policymakers will likely allow the market to self-adjust over time.

The focus of monetary policy remains on managing overall leverage within the economy.

The household debt-to-GDP ratio rose to 75% in 2013 and appears to be continuing north. The mortgage loan-to-GDP ratio is at historical high of 45% while the LDR has continued to rise towards its historical peak almost a year after the introduction of the TDSR.

We suspect that these various measures against leverage will show little unwinding until interest rates begin to rise.

For most people, investment in property is a long-term commitment. Hence, it is important for potential home buyers to take into account the negative impact of interest rates on property prices, as well as to do the necessary “stress testing” to prepare for the higher interest rates that will eventually come.

This will help home owners determine whether their properties will remain affordable under higher rate scenarios.

[seletar]

http://www.bloomberg.com/news/2014-0...-gmt-says.html

Singapore Joins China With Dangerous Debt Level, GMT Says

Bloomberg Jun 4, 2014


Singapore companies’ indebtedness has swelled to the most in Asia after China and India as the city-state’s economic growth slows, according to GMT Research Ltd.

Leverage among the Southeast Asian nation’s corporates is following counterparts in the two larger economies to a level considered a “danger threshold,” Gillem Tulloch, founder of the Hong Kong-based researcher, said in an interview yesterday. Debt rose to six times the amount of operating cash flow in 2013 for non-financial Singaporean companies, from 5.1 times in 2012, a report by GMT Research shows.

“It’s a bit surprising that Singaporean companies seem to have leveraged up significantly over the past few years,” said Tulloch, 43, a former analyst at CLSA Asia-Pacific Markets. “There’s been a slight loss of discipline, or it could be that the growth has not come in as expected.”

Singapore’s government said last month its export-led economy will experience “modest” expansion in 2014 amid a labor-market crunch. It’s likely that growth is headed for a slowdown, since it can’t be sustained without more stimulus or reckless bank lending, GMT Research said.

The leverage ratio in China rose to 7.5 times from 6.8 times last year, while the measure in India grew to 8.1 times from 7 times, the May 28 report showed.

‘Growth Scare’

Singaporean bonds have gained 2.9 percent this year in U.S. dollar terms, less than the 4.4 percent returns for the broader market in Asia, indexes compiled by HSBC Holdings Plc show. The country’s stocks have outperformed the region’s benchmark index, according to MSCI indexes.

Tulloch said equity investors should hold fewer Singaporean, Chinese and Indian shares than the benchmarks they track. He doesn’t have any recommendations for the bond markets.

Companies’ debt to cash flow ratios signal that investment for business expansion in Singapore may be waning, GMT Research said. Enterprises with high ratios of leverage and cash outflows include those in the consumer discretionary, energy and materials sectors, Tulloch said in his report.

“There is a high potential for a growth scare there,” he said. “Singaporean companies, from my experience, are quite well run. You would expect them to pare back capital expenditure in 2014 to restore their balance sheets.”

A corporate-sector bubble starts when free cash outflows exceed 50 percent of net profit for several years, Tulloch said.

Singapore’s companies suffered 37 cents of cash outflows for every $1 of net profit earned in 2013 as they spent 40 percent more in capital expenditure, according to the report. That compared with 12 cents of inflows the previous year. The 2013 outflows for China and India were 51 cents and 93 cents.

GMT Research tracks some 9,000 Asian companies or about 50 percent of all listed companies in the region ranked by descending sales. Tulloch formed GMT Research in December 2013 after leaving Forensic Asia Ltd., a research consultancy set up by former CLSA economist Jim Walker.

[seletar]

http://www.btinvest.com.sg/dailyfree...fers-20140607/

Business Times
Published June 07, 2014

Unsold homes big drag on developers' coffers

Punishing fees seen incentivising some to reprice projects to move sales in near term


DEVELOPERS have collectively paid up to $55.1 million in extension fees for unsold units in their private condo projects since 2012. They could potentially fork out another $80.7 million to extend the sales period for another year if they do not sell their inventory by year-end, according to a study by OrangeTee Research.

"As the penalty amounts to millions of dollars per project, we believe that it will incentivise some developers to reprice some of these projects to move sales in the near term," said OrangeTee research head Christine Li.

A total of 24 condo projects, mostly high-end ones, are still not fully sold two years after receiving their temporary occupation permits (TOPs) between 2010 and 2012, the study showed. Under the government's Qualifying Certificate (QC) rules, developers have to pay extension charges to extend the sales period after two years of the project's TOP.

All developers with non-Singaporean shareholders or directors need to obtain QCs to buy private land for new projects because they are deemed "foreign developers" under the Residential Property Act (RPA). This means the QC rules apply to all listed developers. Privately owned Far East Organization and Hoi Hup are among the few developers exempted from the rules.

Given that the QCs allow developers up to five years to finish building a project and two more years to sell all the units, the heat is on developers to clear their stock by the deadline.

To extend the sales period, developers pay 8 per cent of the land purchase price for the first year of extension, 16 per cent for the second year and 24 per cent from the third year onwards. The charges are pro-rated based on unsold units over the total units in the project.

Such fees drove luxury residential player SC Global to delist from the Singapore Exchange last year after sales slowed significantly due to the government's property cooling measures.

Analysts warn that more extension charges will kick in. The charges paid up so far are just the tip of the iceberg as projects built from land acquired during the 2006-2007 en bloc fever have just crossed a seven-year mark, they say.

"More developers are caught between a rock and a hard place" as they have to decide whether to pay the extension charges or cut prices to move the units, said SLP International executive director Nicholas Mak.

If they pay for extension charges, there is also the question of whether they can recover these costs later on, he said. This is why some developers of luxury projects are resorting to selling the units in bulk to mega investors.

At the end of the first quarter of this year, there were 10,295 unsold units in the Core Central Region (CCR), 8,089 in the Rest of Central Region (RCR) and 12,433 in the Outside Central Region (OCR).

Based on URA caveats, there are 71 unsold units in Wheelock Properties' Scotts Square that TOP-ed in 2011 and 16 unsold units in Wing Tai's Helios Residences, which also TOP-ed in the same year.

"As unsold inventory builds up, there will likely be more bargains in the market if developers want to avoid paying penalties to extend the sales period, especially high-end developers who have already paid premium prices for their lands," Ms Li said.

The study excluded the fees that developers need to pay to extend the completion of projects beyond five years, as they can typically extend without paying the charges "based on technicalities".

Even in a more optimistic scenario where developers manage to sell 20 per cent of the remaining units for the rest of this year, further extension charges to be paid by developers by end-2014 will amount to around $68.3 million.

Some market watchers noted that the QC rules should mark a distinction between larger and smaller projects, given that it takes a longer time to move all the units in large projects in a difficult market as the current one.

Century21 chief executive officer Ku Swee Yong said that demand for high-end projects had been hit hardest by higher additional buyers' stamp duty (ABSD) since January 2013 and a borrowing cap under the total debt servicing ratio (TDSR) since June last year.

Even if a developer decides to set up an investment company to buy the units and rent them out, the company could be hit by a 15 per cent ABSD and is restricted by a loan-to-value limit of 20 per cent.

[seletar]

http://www.businesstimes.com.sg/prem...cancy-20140610

Business Times
Published June 10, 2014

Dark condos shine light on rising vacancy

Suburban areas worst hit; softening rentals seen


As dusk descends upon the Singapore skyline, the excess capacity building up in the private housing market is evident. Dark patches in some condominium developments completed six to 12 months ago, or even longer, point to significant vacancy - PHOTO: REUTERS


[SINGAPORE] As dusk descends upon the Singapore skyline, the excess capacity building up in the private housing market is evident. Dark patches in some condominium developments completed six to 12 months ago, or even longer, point to significant vacancy.

Analysts cite a host of factors, including strong investment demand for real estate after the global crisis, escalation in private home completions of late, and slower expatriate inflow. Vacancies are set to climb and rents fall in general. Suburban locations, where most of the supply is, will be the worst hit.

After the global crisis, investors sought refuge in trusty assets such as real estate. Fuelled by the low interest rate environment, some took to hoarding property at new launches and are hence not bothered whether they can find a tenant after taking possession of their units, say observers. Some high net worth foreign buyers treat their Singapore property as a holiday home and leave it unoccupied most of the time.

But there are others who leave units vacant because they are not able to find tenants. As Ms Lee notes: "Competition for tenants is increasingly intense, with both demand and supply factors at work. On the demand side, changes in labour policies have slowed down the flow of foreign professionals into Singapore while on the supply side, there is a higher-than-average number of private home completions."

JLL national director Ong Teck Hui highlights that "those who bought for rental returns would find themselves in a more competitive leasing market today, where units in mediocre locations would be more difficult to lease and therefore remain vacant for a longer duration, especially during this period of strong supply".

R'ST Research director Ong Kah Seng says that, due to low rents, some owners have left their units empty, especially the cash-rich set who did not take any housing loan for their purchase. "A vacant unit may deteriorate faster but leasing it out at a low rent may not be feasible since it will incur high maintenance costs. High-end properties have the finest finishes, so maintenance and repair costs may be hefty. Selected fit-outs and finishings such as tiles may be of limited collection and difficult to replace if it is damaged by the tenant."

Developers left with unsold units, especially in the slow high-end segment, also contribute to vacancies as these projects are completed. Other factors may also be at play in specific projects. But the overall trend of rising vacancies and softening rents is clear amid climbing private home completions since last year.

The 13,150 private homes that received TOP last year was 27.3 per cent above the previous year's 10,329 and 40 per cent above the past 10-year average of 9,395. The figure for Q1 this year was 4,114 and the full-year tally is expected to hit 17,138, based on estimates submitted by developers to the Urban Redevelopment Authority. Thereafter, completions are slated to climb further to 21,738 next year and 26,252 in 2016 before easing the following year.

URA figures show that the pool of vacant private homes has risen to 19,284 at end-Q1 2014 from 18,003 at end-Q4 2013 and 14,532 at end-Q1 2013. The islandwide vacancy rate rose to 6.6 per cent at end-Q1 this year from 6.2 per cent a quarter earlier and 5.2 per cent at end-Q1 2013.

Rising vacancies have been accompanied by softening rentals. For the first time since Q3 2009, URA's private home rental index contracted in Q4 last year. The index dipped 0.5 per cent quarter-on-quarter, followed by a further 0.7 per cent drop in Q1.

CBRE predicts a 5-8 per cent drop in rents generally this year. JLL predicts a 4-8 per cent decline; Century 21's Mr Ku reckons competition for tenants will drive rents down by 8-10 per cent, followed by a further drop of up to 25 per cent in 2015.

Against the backdrop of the large supply, says DTZ's Ms Lee, some landlords could become more flexible on their rents, particularly after the removal of the vacancy tax refund with effect from Jan 1, 2014. "Landlords now have to pay property tax on their vacant units and some may accept a lower rent and have the unit rented out instead of leaving it empty."

This could create downward pressure on rents.

JLL's Mr Ong predicts the vacancy rate could be around 7-9 per cent at end-2014.

Mr Ku reckons vacancy will head towards 7.5-8 per cent mid to late next year, adding that price drops are likely to be limited to 5-10 per cent per year - assuming the economy is fine.

Competition for tenants is likely to be more intense in suburban projects, as the bulk of completions last year as well as the potential supply pipeline are in Outside Central Region (OCR). URA's Q1 rental index for non-landed private homes in OCR was down 2.3 per cent from a year ago. This compares with a decline of 0.3 per cent for Core Central Region (CCR) and a rise of one per cent in Rest of Central Region (RCR).

Of the 67,507 homes under construction at end-Q1, about 59 per cent were in OCR, 22 per cent in RCR and 19 per cent in CCR. Four years earlier, of the slightly over 36,000 units under construction, the respective shares were 30, 36 and 34 per cent, notes JLL's Mr Ong. "The heavy buying in OCR in the past few years has resulted in units under construction in this submarket surging 270 per cent over the past four years. While it is true that a high proportion of purchases in OCR is for owner-occupation, the level of investment purchases in the past few years has also been substantial.

"Based on rental contracts registered last year, OCR's share of the leasing market was about 31 per cent. Hence, the disproportionate oncoming supply may be expected to impact on this submarket more significantly."

Ms Lee, too, expects a bigger impact on rents and vacancy rates in the suburbs, "although rental demand will still be supported by budget-conscious foreign professionals as the rental quantum for suburban condos is lower than city-fringe or prime condos".

[seletar]

http://www.channelnewsasia.com/news/...-i/663538.html

Property buyers should consider future interest rate hikes: Khaw





SINGAPORE : National Development Minister Khaw Boon Wan has urged those who might be looking to buy property to take into account future spikes in interest rates.

Speaking during a dialogue with young Singaporeans, he also cautioned buyers not to over-commit.

He explained that the current low interest rates for home loans will not last forever, and the eventual rate may be many percentage points higher than it is today.

He also offered advice for property buyers.

Mr Khaw said: "They assume two things. Property prices will keep going (up). Two, interest rates will keep on remaining low. Both are wrong and therefore one day, both will collapse on them. So, if you are over-committed, let's say you can only afford a 3-room flat, (but) you decide to buy five room flat. Yes, based on today's interest rates you can afford a five-room flat. But, when interest rates go up as it will, you will no longer be able to afford a five-room flat and what will happen, your bank will start calling you up to please top up or sell your flat and that's when trouble starts."

In addition, Mr Khaw said the high property prices will not last in the long run.

He added: "Only when you can get enough buyers who can afford, will prices stay up, if not they will come down. Today because of low interest rates, this bubble is being pushed up and sustained longer than it should have. So, it will collapse in a matter of time and therefore do not think that prices will keep on going up."

[seletar]

http://sbr.com.sg/residential-proper....5cTD3PpO.dpuf
Published 12 Jun 2014

Chart of the Day: See the massive spike in Singapore’s home vacancy rate



Large oversupply looms over private developers.

Analysts fear that the government’s efforts to scale down residential supply may not be enough to avert a looming oversupply in 2015 to 2017.

A report by Barclays Research noted that the vacancy rate could hit 9.9% by 2016 assuming an annual demand of 15,500 units

According to Barclays Research, “We believe this is testament to the looming oversupply in 2015-2017 as the government reiterated the reduced future supply will be ‘added to the existing large pipeline supply of more than 90,000 private residential units (including ECs)’.”

Here’s more from Barclays:

Private housing (including ECs) on the Confirmed List for 2H14 is down 15% h/h and 34% y/y to 3,915 units. The bulk of the supply is now made up by the Reserve List, which has also been scaled down and which is unlikely to be triggered for sale should market conditions continue to deteriorate.

We maintain our negative stance on the Singapore residential sector as we see an oversupply of private housing properties and expect prices to fall 20% by 2015E in view of an expected interest rate rise, coinciding with peak supply, and think the vacancy rate could reach a record 10% by 2016E.

[seletar]

http://www.businesstimes.com.sg/prem...-asia-20140621
Business Times
Published June 21, 2014

Concern over indebtedness in Singapore, Asia


THE surge in household debt in Singapore over the past six years - measured as a ratio to gross domestic product (GDP) - has outpaced that of the United States during the run-up to the global financial crisis, a fresh HSBC report has shown.

This reflects overarching wariness that any tightening through regulations or a rise in interest rates would have more impact in this part of the world now than before, though analysts have indicated that the current addiction to debt in Asia is unlikely to spark a credit crisis in the region.

Singapore joins Thailand in registering a jump in household debt to GDP ratios between 2007 and 2013 that is bigger than that of the US for the period between 2001 and 2007, HSBC's note said. Economists measure household debt against GDP as one way to show the extent that economic growth can cover the amount of debt racked up.

"Household debt may not be as big a systemic financial risk as it was in the West, but it highlights a potential growth problem in Asia: without it, how resilient would consumption spending really be?" said HSBC economist Frederic Neumann in the report.

Other analysts have earlier flagged concerns over Asian debt. In February last year, S&P's analyst, Tan Kim Eng, noted in a report that loose monetary conditions may be "magnifying financial and economic risks".

"The conditions that supported robust economic growth in the region could turn less supportive in the future. In the current circumstances, a lack of regulatory vigilance could create possible financial instability," Mr Tan said.

But he also argued that debt-to-GDP ratios can overstate financial risk in some economies, particularly for financial centres such as Singapore and Hong Kong.

For example, companies may take loans from domestic banks to invest abroad, and these projects may not count towards the home economy's GDP.

OCBC, which has the second-largest construction loan book in Singapore, said earlier this year that more property developers are taking loans from the bank for projects in London and Australia.

In a comparison of Singapore and Hong Kong, Barclays analyst Sharnie Wong said in a March report that Singapore banks have shown greater discipline in pricing loans.

In Singapore, personal loans - excluding those for housing - are typically secured against collateral, and the size of unsecured lending is restricted based on the individual's income.

A person who earns more than $30,000 a year can be offered an unsecured loan of about four times his monthly salary. The bank may raise this ratio for a person who earns at least $120,000 a year.

And, Singapore is now reviewing rules for money-lending - usually for unsecured loans - and will look at, among other things, the cap on the total of such loans taken by each borrower.

By contrast, personal loans in Hong Kong are mostly unsecured, since lending rates can be as low as 2 per cent, and loan size can be up to 18 times of monthly income, Ms Wong said.

In Singapore, household debt-to-GDP ratio stood at about 75 per cent last year. This is higher than Hong Kong's 62 per cent, though for Hong Kong, that is its historic high.

Over here, the debt ratio had breached the 90 per cent mark in 2002 and 2003, and household debt has since eased after the government introduced a borrowing cap for property loans, known as the total debt servicing ratio, Ms Wong said.

Housing loans in Singapore make up about three-quarters of all consumer loans, which stood at $228 billion in April.

S&P's Mr Tan noted high domestic saving rates for some parts of Asia offer a buffer against rising debt. He also highlighted that Asia's total leverage - which includes debt from the public and private sectors - remains "well lower" than in much of Europe, given the relatively lower government borrowings.

There are now brewing concerns over China's government debt, though this is mainly focused on local government debt, Mark Austen, CEO of Asia Securities Industry and Financial Markets Association, a finance-trade body, told BT in an interview.

China's overall local-government debt stood at 17.9 trillion yuan (S$3.6 trillion) - or about a third of its GDP - for the first six months through to June last year, said media reports that cited China's National Audit Office figures.

[Arcachon]

Property Bubbles, Bank Bubbles, all bubbles.........

Let see.

1. 2 Bedroom bought at SGD 535,000 in 2006. Now valuation at SGD 1,500,000 in 2010.
2. 3 Bedroom bought at SGD 1,305,800 in 2011.
3. 5 room HDB bought at SGD 250,000 in 1995. Valuation at SGD 640,000 in 2014
4. 3 room HDB bought at SGD 65,000 in 1995 now SGD 300,000

Price can drop how much ?????

Quick, go and sell and Bank all your money in the Bank......

OR

MTB it's party time, go out and buy.........

[seletar]

http://www.stproperty.sg/articles-pr...in-q2/a/169687

Mortgagee sales touch quarterly high in Q2

Trend seen gaining momentum due to rising supply of homes, weaker rental market

The Business Times - June 24, 2014


[SINGAPORE] The number of properties up for auction by mortgagees (or lenders) as well as their share of the number of properties going under the hammer has hit a quarterly high in Q2.

Auctioneers say this reflects the difficulty that financially stretched borrowers face in securing buyers for their properties since the implementation of the total debt servicing ratio (TDSR) framework a year ago. Because of this, financial institutions have had to repossess more properties and put them up for auction.

The trend is expected to gain momentum as the rising supply of non-landed private homes will make it harder for mortgagors (or borrowers) to find buyers and thus dispose of their properties themselves - resulting in more properties ending up as mortgagee sales.

Furthermore, the reduced inflow of expats into Singapore is shrinking the pool of potential tenants, hitting rental incomes and hurting owners' ability to service their loans.

Figures from Colliers International show that this quarter, 42 mortgagee sale properties have been put up for auction - almost double the 22 in Q1 this year. In Q2 2013, the figure was just six properties.

The latest figure is the highest since Q3 2009, when 63 mortgagee sale properties landed on the auction block. The first-half tally of 64 was double the 32 for the whole of last year - and also a big jump from 24 in 2012 and 39 in 2011.

In H1 this year, the number of properties put up for auction by owners was 192, down from 226 in the same year-ago period.

As a result, while the owner sales' share of properties put up for auction has dropped from 93.4 per cent in full-year 2013 to 75 per cent in H1 2014, the mortgagee sales' share has risen from 6.6 per cent to 25 per cent. On a quarterly basis, the mortagee sale share has doubled from 16.7 per cent in Q1 this year to 33.9 per cent in Q2 - the highest level since the 35.5 per cent share in Q1 2008 during the global crisis.

Colliers' analysis took into account information as at June 19 from auction lists for the major houses for the month of June. While DTZ conducted its auction last Thursday, Colliers, Knight Frank and JLL will conduct theirs this week.

JLL's analysis shows that for January-May this year, 13 properties (both owner and mortgagee sales) were sold for a total of nearly $26.2 million at auction. Of this, the mortgagee sales accounted for nine properties which fetched $12.8 million.

For the whole of last year, 21 properties amounting to $99.6 million were sold at auction, of which 10 properties totalling $12.6 million involved mortgagee sales.

Typically, financial institutions provide some leeway to borrowers who are experiencing difficulty servicing their mortgages by giving them the first crack at finding a buyer as owner sales tend to fetch a higher price compared with a mortgagee sale which is often seen as distressed. However, the implementation of TDSR has made it difficult for potential buyers to obtain credit.

"More buyers have also chosen to stay on the sidelines with a view that prices will start to ease," noted JLL's head of auction and sales, Mok Sze Sze.

As a result, said Colliers' deputy managing director Grace Ng, banks have little choice but to respossess such properties - resulting in the increase in mortgagee sale properties surfacing at auctions.

She added that due to exuberance at private housing launches in the past few years, many buyers bought uncompleted properties "off plan" with the non-savvy ending up with units that have undesirable orientation or layout. Such owners now face difficulty finding buyers and tenants.

While the majority of mortgagee properties ending up on the auction block are residential, there are also signs of an increase in strata industrial units, notes Ms Mok.

Going by Colliers' analysis, nearly 63 per cent of the mortgagee sale properties that have been put up for auction in the first six months are residential properties, followed by a 17.2 per cent share each for industrial and retail properties.

Colliers' auction tomorrow will feature a mortgagee sale property at Turquoise condo in Sentosa Cove. The 2,777-sq-ft four-plus-one bedroom unit previously surfaced at an auction on April 30. It was withdrawn without bids at the opening price of $5 million.

Another mortgagee property to be featured at the same auction is a third-floor unit at the freehold Stevens Court. The 2,863-sq-ft unit has five bedrooms. JLL's auction on Thursday will feature mortgagee sale units at VisionCrest Residence, Residences@Killiney, The Floravale in Westwood Avenue and a shop unit at 116 Yio Chu Kang Road. At Knight Frank's auction today, a mortagee sale of a two-bedder at Dover Parkview is expected to go under the hammer.

Sharon Lee, head of auctions at the firm, advises those having problems servicing loans to be realistic. Given the buyer's market today, one has to be aware that potential buyers would be anticipating price corrections - instead of sticking to the last transacted price in the project some time ago, she said.

[lajia]

Ah B is back big time...

[seletar]

http://sbr.com.sg/residential-proper....j3RXdA82.dpuf
Published 25 Jun 2014

Chart of the Day: This graph rubs the ugly truth about home supply in everyone's faces



We've all been warned.

Analysts have long been getting the jitters from looming housing oversupply, and now these nightmares of supply glut are coming true.

According to OCBC, including HDB, DBSS and EC completions, we anticipate that 50.0k, 49.7k and 73.6k homes will come into the physical supply in FY14, FY15 and FY16, respectively.

Here's more from OCBC:

Assuming a 6.0m population target by 2020 from the latest Population white paper, we forecast average population growth at ~86k individuals per annum from 2014-20.

Assuming a conservative 3 persons per household, this translates to an incremental demand of ~29k physical homes per year, which points to a fairly clear physical oversupply situation ahead.

We saw the URA residential price index fall 1.3% and 0.9% in 1Q14 and 4Q13, respectively, after nine quarters of sub-2% appreciation before that.

The mood of the market has been increasingly cautious after the latest TDSR requirements and we believe that significant headwinds, i.e., a physical oversupply situation over FY14-16 and an anticipated interest rate uptrend after mid-FY15, will likely keep the market on its back foot

[Arcachon]

Welcome back AH B.......

[seletar]

http://sbr.com.sg/residential-proper....K64EBqbj.dpuf
Published 02 July 2014

We’re on sale: High-end CCR property prices continue steep drop in Q2


More property buyers are fleeing from expensive properties in the Core Central Region. Data released by the URA today revealed a steep price decline in the CCR for 2Q14, with more decreases expected in the latter half of the year.

According to Knight Frank, the decline is caused by increasingly price-sensitive homebuyers and the government’s property cooling measures.

“With the property cooling measures and the TDSR framework reining in buying momentum, lacklustre buying sentiment is likely to persist in the near term. With homebuyers becoming increasingly price-sensitive and discerning in their purchases, developers would need to review their pricing and marketing strategies in order to move units. The downward fall in prices could continue into the second half of 2014,” stated the report.

Here’s more from Knight Frank:

Property prices in all non-landed private residential market segments fell, with the largest decline seen in the high-end market in the Core Central Region (CCR). Prices fell by 1.5 per cent q-o-q, marking its fifth consecutive quarter of decline. On a y-o-y basis, prices have fallen 4.8 per cent.

Based on caveats lodged data as at 1st July 2014, the steeper price decline seen in the CCR for 2Q 2014 could be due to falling new sale and resale prices of high-end properties in Districts 1 and 2, which saw more than 10 per cent q-o-q decline in prices.

Private home prices in the CCR are expected to fall by another 1 to 2 per cent per quarter in the next half of the year, with an estimated 4 to 8 per cent y-o-y decline in 4Q 2014.

[walkthetiger]

http://www.channelnewsasia.com/news/...-i/663538.html

Property buyers should consider future interest rate hikes: Khaw


SINGAPORE : National Development Minister Khaw Boon Wan has urged those who might be looking to buy property to take into account future spikes in interest rates.

Speaking during a dialogue with young Singaporeans, he also cautioned buyers not to over-commit.

He explained that the current low interest rates for home loans will not last forever, and the eventual rate may be many percentage points higher than it is today.

He also offered advice for property buyers.

Mr Khaw said: "They assume two things. Property prices will keep going (up). Two, interest rates will keep on remaining low. Both are wrong and therefore one day, both will collapse on them. So, if you are over-committed, let's say you can only afford a 3-room flat, (but) you decide to buy five room flat. Yes, based on today's interest rates you can afford a five-room flat. But, when interest rates go up as it will, you will no longer be able to afford a five-room flat and what will happen, your bank will start calling you up to please top up or sell your flat and that's when trouble starts."

In addition, Mr Khaw said the high property prices will not last in the long run.

He added: "Only when you can get enough buyers who can afford, will prices stay up, if not they will come down. Today because of low interest rates, this bubble is being pushed up and sustained longer than it should have. So, it will collapse in a matter of time and therefore do not think that prices will keep on going up."

Wise advice

[seletar]

http://sbr.com.sg/economy/news/chart....ggg0PEst.dpuf
Published 02 July 2014

Chart of the Day: Take a look at the worrying drop in Singapore’s domestic deposits



This is the first decline since 2003.

Banks are getting wary of Singapore’s shrinking deposit pool, and they might hike up everyone’s funding costs in the process.

According to CIMB, the year-on-year decline in domestic deposits revealed in Singapore’s May banking statistics has not been seen since the SARS epidemic in 1Q03.

“A worrying trend that appeared in May is that DBU deposits shrank (-0.8% mom, -0.2% YTD), led by an outflow of fixed deposits. We have to go back to as far as Mar 03 (SARS) to find a yoy decline in system deposits. As loan growth continues to outpace deposit growth, DBU LDR is up (May:111%, Apr:109%), so is S$ LDR (May:84%, Apr: 83%),” reported the CIMB.

Here’s more from the report:

A shrinking deposit pool is worrying as banks will have to compete aggressively for a shrinking pie, hiking up funding costs for all.

The concern is accentuated with the new LCR requirements, especially for the foreign banks who need to offer attractive rates to compete.

If higher rates merely poached time deposits from the local banks, it would not be a worry. However, recent CASA packages suggest that the local banks are equally wary of CASA slippage.

[Arcachon]

Already consider, also consider how fast your money is depreciating in the Bank.

[Arcachon]

http://sbr.com.sg/economy/news/chart....ggg0PEst.dpuf
Published 02 July 2014

Chart of the Day: Take a look at the worrying drop in Singapore’s domestic deposits



This is the first decline since 2003.

Banks are getting wary of Singapore’s shrinking deposit pool, and they might hike up everyone’s funding costs in the process.

According to CIMB, the year-on-year decline in domestic deposits revealed in Singapore’s May banking statistics has not been seen since the SARS epidemic in 1Q03.

“A worrying trend that appeared in May is that DBU deposits shrank (-0.8% mom, -0.2% YTD), led by an outflow of fixed deposits. We have to go back to as far as Mar 03 (SARS) to find a yoy decline in system deposits. As loan growth continues to outpace deposit growth, DBU LDR is up (May:111%, Apr:109%), so is S$ LDR (May:84%, Apr: 83%),” reported the CIMB.

Here’s more from the report:

A shrinking deposit pool is worrying as banks will have to compete aggressively for a shrinking pie, hiking up funding costs for all.

The concern is accentuated with the new LCR requirements, especially for the foreign banks who need to offer attractive rates to compete.

If higher rates merely poached time deposits from the local banks, it would not be a worry. However, recent CASA packages suggest that the local banks are equally wary of CASA slippage.

Before QE nobody know you can just change saving account to checking account, after QE every Central Bank know how to change the money from saving account to checking account.

http://www.financialsense.com/contri...oney-inflation

On Money Demand & QE
BY CULLEN ROCHE · THURSDAY, NOVEMBER 21ST, 2013
One topic that seems to confuse a lot of people is the way that QE increases the broad money supply. This excellent post by Ramanan gets into the heart of the matter and I love the way Ramanan explains things here. In case you have no idea what I am talking about – QE adds to the broad money supply of bank deposits when banks buy bonds from the non-bank public and on-sell them to the Fed. There’s an appearance that Fed is determining the money supply here. But this is a lot less impactful than most people think and it’s because this idea of “money” is less important than some people think.

When QE occurs with a non-bank the non-bank receives deposits and the Fed takes a T-bonds onto its balance sheet (you can see all the accounting steps here). At its most basic level this is an asset swap where the composition of the private sector’s stock of assets changes. And that’s really the key here. If you’re like most people in the world and your spending is a function of income relative to desired saving then QE doesn’t really change the aggregate private sector’s spending habits (outside of wealth effects and things like that) because QE is a lot like taking a savings account and swapping it out for a checking account. Would you suddenly alter your spending habits if you had a CD that came due and you were suddenly more liquid? No, you’d consider the new liquid deposits within your broader saving and income stream. Basically, people obsess over this concept of “money” a bit too much and how it impacts QE. And that has ended up causing a lot of silly hyperinflation predictions and whatnot….

http://pragcap.com/on-money-demand-qe

[seletar]

http://sbr.com.sg/economy/news/singa....qOe5ZXIu.dpuf
Published 02 July 2014

Singapore faces a credit meltdown



Debt levels higher than the US pre financial crisis.

Singapore and other Asian countries are facing an economic crisis of the same proportions as the US financial meltdown that put the world’s economies to its knees. Singapore and many Southeast Asian countries have already surpassed US debt-to-GDP ratio. There is no sign of that growth slowing down. This is eerily similar to the financial conditions that pre-dated the American collapse, and economists are deeply concerned.

According to Duncan Woolridge of UBS, “China, North Asia, Hong Kong, Singapore, Thailand, and Malaysia stand out based on levels of leverage alone as at risk. This trend appears unsustainable and a reversal on the horizon should be expected, though we do not claim to know the exact day that will unfold.”

Here’s more:

Liquidity risk matters as much as leverage. UBS expects the Fed to hike 25bps in mid-2015 and raise Fed Funds to 1.25% by end 2015.

Countries with current account deficits, high loan to deposit ratios, or completely open capital accounts should find it difficult to grow deposits fast enough to sustain the current pace of credit growth, in our view.

Aggressive reform is urgently needed, in our view, unless exports can bail out the region. Unit labor costs (ULCs) have been rising because of weak exports, which is mainly a function of weak DM economic growth.

Asian policies generally aim to prevent unemployment from rising and to sustain wage growth when exports slow. They have largely succeeded at this, but the result is rising ULCs and that means real effective exchange rates appreciate.

That's ok as long as DM demand recovers soon, exports return to strong growth, and ULCs stabilize. However, we still think that export growth on a volume basis will remain perhaps 40-50% below pre-crisis even assuming better exports to DM going forward.

This means no relief for ULCs and real exchange rates should appreciate, but of course they cannot appreciate ad nauseam without a loss of competitiveness and trade deficits.

[Arcachon]

http://www.tradingeconomics.com/sing...oney-supply-m3

[seletar]

http://business.asiaone.com/news/moo....57sLRgEr.dpuf

Moody's: Bad loans risk up for local banks



The Straits Times
Wednesday, Jul 09, 2014


Ratings agency Moody's Investors Service has retained its negative outlook on Singapore's banking system over the next 12 to 18 months, it said yesterday.

The agency expects that a surge in lending by Singapore banks in recent years will raise the risk of problem loans when interest rates rise.

"Because the banks have rapidly grown both their domestic and cross-border loans in recent years, we expect a moderate increase in problem loans, as interest rates rise... and as asset prices are likely to fall," said Eugene Tarzimanov, vice-president and senior credit officer at Moody's.

"As a result, the banks will face a modest increase in their credit costs over the next 12-18 months," he added.

But Mr Tarzimanov expects the problem loans of Singapore banks this year and next year to "increase only moderately", noting that such loans made up just 1 per cent of all loans here at the end of last year.

Banks' foreign loans are more likely to be at risk than domestic loans, he added.

[seletar]

http://www.stproperty.sg/articles-pr...171779/page3/1

More buying smaller private units

The Straits Times - July 10, 2014


SOARING prices and home loan curbs are forcing increasing numbers of buyers to turn to ever smaller homes as they struggle to get on the property ladder.

The median size of private homes sold dropped to 947 sq ft in the period from July last year to June this year, according to STProperty. This is slightly smaller than a Housing Board (HDB) four-room flat, which is typically around 969 sq ft.

STProperty, which looked at all private home transactions, including new sales and resales, also found 40 per cent of units sold over the past 12 months have been no bigger than 800 sq ft, which is the typical size of a one- or two-bedroom condominium unit.

The 947 sq ft figure was 3.3 per cent smaller than the median size of 979 sq ft in the first half of last year, before a total debt servicing ratio (TDSR) framework was imposed. TDSR, which took effect in late June last year, restricts a borrower's monthly debt repayments to at most 60 per cent of his gross monthly income. This has driven many buyers to aim for smaller homes with cheaper total prices.

The effect of TDSR on home sizes was even more pronounced within the new sales market.

The median floor area of new homes bought from developers in the past 12 months was just 753 sq ft, according to caveats lodged with the Urban Redevelopment Authority. That was 12.5 per cent smaller than the median size of 861 sq ft in the first six months of last year before TDSR was imposed.

A run-up in property prices per sq ft (psf) since 2009 after the global financial crisis has also played a part in shrinking private home sizes, STProperty said yesterday.

Non-landed home prices jumped 56.2 per cent from the second quarter of 2009 to the third quarter of last year, which was the peak, according to URA figures.

Coincidentally, the median size of private homes sold has been steadily declining since 2009 when the figure was 1,227 sq ft, STProperty noted in its report.

"While the TDSR framework is working well to ease home prices, the shrinking home size is another area that the Government might closely monitor... There are certain social implications should small homes become a norm in Singapore," said STProperty analyst Jason Chen.

[seletar]

http://sbr.com.sg/residential-proper....D2aQIhLV.dpuf
Published 10 July 2014

Two-year low: HDB price index slides by 6.1% in June


Resale prices continue their 5-month slide.

The government’s property cooling measures are really working out, judging by the two-year low in HDB’s price index in June. According to the Singapore Real Estate Exchange (SRX), HDB prices have dropped by 6.1% prices have dropped from June 2013.

The SRX HDB Flash Report for June 2014 showed that prices have dropped by 6.8% compared to peak levels in Apr 2013. Resale volume remained flat and rental prices dropped by 1.1%, while rental volume also fell by 2%.

“Overall, HDB resale prices slipped 0.6% in June compared to May. The price drop is evident in 3,4,5-room flats which saw a decline of 0.6%, 0.8%, and 0,3% respectively. Executive flats on the other hand experienced a 1.3% increase in price. However, compared to its peak in Feb 2013, Executive flats showed a decline of 5.1%,” the report stated.

Here’s more from SRX:

According to HDB resale data compiled by SRX, 1,315 HDB flats were sold in June's resale market. June's volume remained relatively flat from May's 1,320 transacted units.

On a year-on-year basis, June's resale volume is also relatively flat compared with 1,325 units resold in the same month of last year. Comparing to the peak where 3,649 units were resold in May 2010, the volume is still down by 64.0%.

An estimated 1,590 HDB flats were rented in June 2014, a 2.0% decrease from May's 1,622 units. On a year-on-year basis, June's rental volume was 0.9% higher than the same month of last year in which 1,576 units were rented.

Overall HDB rental prices decreased by 1.1% in June compared to May, reaching a new low since Jan 2012. 4,5-room flats and executive flats softened by 1.7%, 1.3% and 1.1% respectively, while 3-room flats saw a slight 0.1% price increase.

On a year-on-year basis, overall rental prices in June 2014 are down 3.4% from the same period last year.

[seletar]

http://sbr.com.sg/residential-proper....69hYHb5z.dpuf
Published 14 July 2014

Striking a bargain: Private residential resale prices hit 18-month low in June


Prices slipped in all three regions.

Homeowners who are thinking of re-selling their property must brace themselves for thinner and thinner profits. Overall resale prices of non-landed private homes continued their steady decline in June, reaching an 18-month low as prices fell islandwide.

According to the Singapore Real Estate Exchange’s Private Residential Flash Report, private resale prices fell by 1.4% month on month in June, a record low since December 2012. But compared to the recent price peak in Jan 2014, June prices are 4.7% lower.

15 out of 24 of districts also saw negative median transaction over x-values. This means that majority of the non-landed private property buyers last month in these districts purchased their units below what other buyers who came before them paid for in similar units.

For districts with more than 10 resale transactions in the month of June, district 15 (Katong, Joo Chiat, Amber Road) and 10 (Bukit Timah, Holland Rd, Tanglin) had the lowest median TOX at -$50,000 and -$37,000 respectively.

“An estimated 452 resale transactions were registered in the month of June, a 7.9% increase month-on-month. On a year-on-year basis, resale volume posted a 23.8% drop compared to 593 units resold in the same month of last year. Compared to the peak when 2050 units were resold in April 2010, the volume was still down by 78.0%. Since beginning of the year, resale volume has gone up by 53.7%,” the SRX noted.

On a regional basis, prices fell in all 3 regions. Rest of Central Region (RCR) led the fall by a 3.2% decrease, followed by prices in Core Central Region (CCR) and Outside Central Region (OCR) which dropped 1.7% and 0.3% respectively.

[seletar]

http://www.todayonline.com/business/...plunge-68-june

New private home sales plunge 68% in June

TODAY
Published: 1:14 PM, July 15, 2014


SINGAPORE — The private housing market returned to the doldrums in June after a burst of activity in the previous months, with developers scaling back new launches in the traditionally slow period.

Developers sold 482 new private homes last month, 68 per cent lower than the 1,488 units that were sold in May, latest data by the Urban Redevelopment Authority (URA) showed today (July 15).

The lacklustre sales performance came as developers launched only 418 new units, compared to 1,819 homes in the previous month.

Coco Palms at Pasir Ris Grove was the top selling project of the month with 55 out of the 100 units launched snapped up at a median price of S$1,014 per square foot (psf).

The Panorama at Ang Mo Kio, which was re-launched at a lower price in May, moved another 49 units at a median of S$1,287 psf, making it second best-selling project in June.

[seletar]

http://www.stproperty.sg/articles-pr...-time/a/172935

More failing to repay mortgages on time

Experts cite slightly higher jobless rate, property market correction

The Straits Times - July 19, 2014


MORE private home owners are not making their mortgage payments on time, figures from the Credit Bureau of Singapore show.

The number of borrowers with delinquent mortgages - accounts that have not been paid for more than 30 days - hit 4,186 in May, up 20 per cent from the 3,340 a year earlier, the Credit Bureau told The Straits Times.

Delinquent borrowers comprised 0.82 per cent of private home loans in May, up from 0.7 per cent in the same month last year.

But there was a much smaller increase in the number of mortgage defaults. Banks wrote off six mortgages in the first five months of the year, a touch up from the five bad loans over the same period last year.

The Credit Bureau does not decide on the status of a mortgage, it said, but banks typically consider accounts with payments that have been overdue for 90 days or more as a defaulted loan.

However, industry players noted that the decision to repossess a property varies among banks.

Although the percentage rise in the number of delinquent accounts was more than the increase in total private home loans, experts note that the figures are not yet alarming.

Mr Alvin Liew, senior economist at United Overseas Bank, said: "It's good to pay attention to the numbers, but it's too early to conclude that this is the start of a major problem."

Loan curbs, known as the Total Debt Servicing Ratio (TDSR), were introduced in June last year to stop home buyers from overstretching themselves.

Mr Liew noted that as the figures are cumulative, there could be highly leveraged individuals who took out large loans before the TDSR was introduced.

However, given the stricter loan curbs, the situation is expected to improve, said Mr Liew.

Another possible reason behind the increase in overdue payments could be the slight rise in the overall jobless rate, which increased from 1.8 per cent in December last year to 2 per cent in March.

Mr Song Seng Wun, regional economist at CIMB, pointed out that it could be a reflection of the correction in the property market.

The number of private condominium homes completing this year is expected to hit 17,000, up from 13,150 last year.

As tenants have more options amid a softening market, owners who bought units expecting to finance them with rental income could find themselves burdened instead, Mr Song said.

Moreover, mortgages are almost fully drawn down upon the completion of a new property, bumping up the monthly payments, he noted.

This underlines the increasing number of properties that were put up for auction by banks.

Earlier reports showed that 42 mortgagee sale properties went to auction in the second quarter, the highest since the third quarter of 2009, when 63 homes were up for a fire sale.

Repayment schemes can be worked out with the bank, said Mr Joseph Wong, head of consumer credit risk at OCBC Bank, but borrowers at risk should inform the bank as soon as possible as a sign of commitment to the loan.

"Some options could include lower repayments to meet a temporary change in their financial position," added Ms Lui Su Kian, managing director and head of deposits and secured lending at DBS Bank.

[seletar]

http://www.businesstimes.com.sg/prem...ns-q2-20140723

Developers' pessimism deepens in Q2

Rising construction costs, inflation, interest rates seen roiling market

Business Times
Published July 23, 2014


DEVELOPERS are more pessimistic about the property market in the coming six months, citing rising cost of construction, inflation, and interest rates as factors that will likely have an adverse impact on market conditions.

The NUS-Redas Real Estate Sentiment Index Survey's Future Sentiment Index - which measures sentiments towards the market outlook over the next six months - fell to 3.4 in Q2 compared with 3.9 in Q1.

A score under five indicates deteriorating market conditions while scores above five indicate improving conditions.

Meanwhile, the Current Sentiment Index slipped marginally, from 3.7 in the last quarter to 3.6.

Taken on a year-on-year basis, the Composite Sentiment Index (which measures overall sentiment) was weaker at 3.5 in Q2 compared to 4.5 previously.

Looking ahead into the next six months, the key potential risks are rising inflation/interest rates as identified by 75.4 per cent of respondents and rising cost of construction (63.1 per cent).

Equally worrying is the excessive supply of new property launches and a slowdown in the global economy, which were identified by 53.8 per cent of respondents.

However, 31.7 per cent of developers surveyed said that they expect moderately more residential launches in the coming six months, while 29.3 per cent said that they expect residential launches to hold at the same level.

In terms of unit price change, 26.8 per cent of them anticipate that residential prices will hold in the next six months, up from 26.3 per cent in the previous quarter. Majority of developers still expect unit prices to be moderately less (63.4 per cent compared with 64.8 per cent previously).

Of the various property sectors, prime and suburban residential sectors were the worst performing segments according to the survey.

The prime residential sector showed a current net balance of -72 per cent and a future net balance of -69 per cent; while the suburban residential sector showed a current net balance of -63 per cent and a future net balance of -65 per cent in Q2.

The current and future net balance percentage is defined as the difference between the proportion of respondents who have selected positive options and the proportion who selected negative options.

[teddybear]

If this condition persist till GE-2016 (or there about), we will know from GE voting results whether majority support lower property prices (which some minority group has been advocating and shouting very loudly) or they support higher property prices.........................

http://sbr.com.sg/residential-proper....D2aQIhLV.dpuf
Published 10 July 2014

Two-year low: HDB price index slides by 6.1% in June


Resale prices continue their 5-month slide.

The government’s property cooling measures are really working out, judging by the two-year low in HDB’s price index in June. According to the Singapore Real Estate Exchange (SRX), HDB prices have dropped by 6.1% prices have dropped from June 2013.

The SRX HDB Flash Report for June 2014 showed that prices have dropped by 6.8% compared to peak levels in Apr 2013. Resale volume remained flat and rental prices dropped by 1.1%, while rental volume also fell by 2%.

“Overall, HDB resale prices slipped 0.6% in June compared to May. The price drop is evident in 3,4,5-room flats which saw a decline of 0.6%, 0.8%, and 0,3% respectively. Executive flats on the other hand experienced a 1.3% increase in price. However, compared to its peak in Feb 2013, Executive flats showed a decline of 5.1%,” the report stated.

Here’s more from SRX:

According to HDB resale data compiled by SRX, 1,315 HDB flats were sold in June's resale market. June's volume remained relatively flat from May's 1,320 transacted units.

On a year-on-year basis, June's resale volume is also relatively flat compared with 1,325 units resold in the same month of last year. Comparing to the peak where 3,649 units were resold in May 2010, the volume is still down by 64.0%.

An estimated 1,590 HDB flats were rented in June 2014, a 2.0% decrease from May's 1,622 units. On a year-on-year basis, June's rental volume was 0.9% higher than the same month of last year in which 1,576 units were rented.

Overall HDB rental prices decreased by 1.1% in June compared to May, reaching a new low since Jan 2012. 4,5-room flats and executive flats softened by 1.7%, 1.3% and 1.1% respectively, while 3-room flats saw a slight 0.1% price increase.

On a year-on-year basis, overall rental prices in June 2014 are down 3.4% from the same period last year.

[seletar]

Residential rents continue sinking and private homes vacancy rates continue hiking, now up to 7.1% in Q2 2014.

Developers still have 27,024 private home units unsold.

The overall pipeline supply of private homes + ECs = 102,400 units, huge oversupply on the way to hike the vacancy rate to record high plus interest rates hike coming next year.


http://business.asiaone.com/news/pri....4RexetHs.dpuf

Private home prices in Singapore continue to fall in Q2: URA

The Business Times
Friday, Jul 25, 2014


SINGAPORE - Urban Redevelopment Authority's official private home price index fell one per cent in the second quarter of this year compared with the first quarter.

Here is an excerpt from the press statement by the Urban Redevelopment Authority:

The Urban Redevelopment Authority (URA) released today the real estate statistics for 2nd Quarter 2014.

PRIVATE RESIDENTIAL PROPERTIES

Prices and Rentals

Prices of private residential properties decreased by 1.0 per cent in 2nd Quarter 2014, following the 1.3 per cent decline in the previous quarter. This was the third straight quarter of price decline.

Price decline was observed across all segments of the private residential property market. Prices of non-landed properties in the Core Central Region (CCR) declined by 1.5 per cent, following the 1.1 per cent decrease in the previous quarter. Prices in the Rest of Central Region (RCR) declined by 0.4 per cent, after decreasing by 3.3 per cent in the previous quarter. In Outside Central Region (OCR), prices declined by 0.9 per cent, significantly more than the 0.1 per cent decline in the previous quarter. Prices of landed properties declined by 1.7 per cent, significantly more than the decrease of 0.7 per cent in the previous quarter.

Rentals of private residential properties fell by 0.6 per cent in 2nd Quarter 2014, compared with the 0.7 per cent decline in 1st Quarter 2014.


Launches and Take-up

Developers launched 2,843 uncompleted private residential units (excluding Executive Condominiums, ECs) for sale in 2nd Quarter 2014, compared to1,964 units in 1st Quarter 2014.

Developers sold 2,665 private residential units (excluding ECs) in 2nd Quarter 2014, compared to the 1,744 units sold in 1st Quarter 2014.

No new EC units were launched for sale in 2nd Quarter 2014. Developers sold 154 EC units in 2nd Quarter 2014, compared to the 149 units sold in 1st Quarter 2014.


Resales and Sub-sales

There were 1,314 resale transactions in 2nd Quarter 2014, compared to 941 transactions in 1st Quarter 2014. Resale transactions accounted for 31.9 per cent of all sale transactions in 2nd Quarter 2014, compared to 33.5 per cent in 1st Quarter 2014.

There were 139 sub-sale transactions in 2nd Quarter 2014, compared to 128 transactions in 1st Quarter 2014. Sub-sales accounted for 3.4 per cent of all sale transactions in 2nd Quarter 2014, lower than the 4.6 per cent recorded in 1st Quarter 2014.


Supply in the Pipeline

As at the end of 2nd Quarter 2014, there was a total supply of 76,0143 uncompleted private residential units (excluding ECs) in the pipeline, compared to 80,261 units in 1st Quarter 2014.

Of this number, 27,024 units remained unsold as at 2nd Quarter 2014. After adding the supply of 12,812 EC units in the pipeline, there were 88,826 units in the pipeline.

In addition, another 13,592 units (including ECs) will soon be added to the pipeline supply. These units are from Government Land Sales (GLS) sites that have been awarded to developers, but for which planning approvals had not yet been obtained as at 2nd Quarter 2014; and Confirmed List sites from the 1H2014 and 2H2014 GLS Programmes that have not yet been awarded. If these units are included, there would be about 102,400 private housing and EC units in the overall pipeline supply.

Based on expected completion dates reported by developers, 9,242 units (including ECs) will be completed in the second half of 2014. Overall, 20,023 units will be completed in 2014. Another 24,893 units (including ECs) are expected to be completed in 2015. In comparison, about 14,400 units (including ECs) were completed in 2013.


Stock and Vacancy

The stock of completed private residential units (excluding ECs) increased by 4,715 units in 2nd Quarter 2014. The vacancy rate of completed private residential units (excluding ECs) increased from 6.6 per cent at the end of 1st Quarter 2014 to 7.1 per cent at the end of 2nd Quarter 2014.

[seletar]

http://sbr.com.sg/residential-proper....pJ7i855u.dpuf

Chart of the Day: This chart shows how bad residential oversupply can get





According to Phillip Capital, over the next 3 years, it would be an oversupply situation within the Singapore residential segment. Inclusive of both public and private sectors, they project the physical completion of 168,200 residential units from 2014 to 2016.

In contrast, they look into the underlying ‘real’ demand that stems from population growth.

Here's more from Phillip Capital:

We estimate that the increase in population will provide take-up of c. 71,400 residential units. Beside the local government intervention in the aforementioned portion, the oversupply situation will be a major factor in the gloomy outlook for residential.