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Thread: Mass-market homes 'face price pressure'

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    Default Mass-market homes 'face price pressure'

    [url]http://www.straitstimes.com/archive/friday/premium/money/story/mass-market-homes-face-price-pressure-20141205[/url]

    [B][SIZE=5]Mass-market homes 'face price pressure'[/SIZE][/B]

    [B]OCBC report also says capital values of shoebox units could be tested[/B]

    Published on Dec 5, 2014 1:00 AM

    By Marissa Lee


    THE demand for mass-market flats has fallen sharply this year and is putting increasing pressure on prices, says OCBC Investment Research.

    It forecasts that prices could fall up to 15 per cent over the next two years while sales of new homes will stay muted next year.

    The numbers from this year point to the gloom ahead.

    There were only 6,800 private homes sold - excluding landed properties and executive condominium units - in the 10 months to Oct 31, half the level of the same period last year, says OCBC Investment Research analyst Eli Lee, adding that the pain is especially acute in the mass-market segment.

    "Mass-market home sales routinely made up the bulk of the total market volume - 69 per cent of total sales over January 2012 to June 2013. As we entered the bear market in the second half of 2013, the dominance of the segment waned and constituted 51 per cent of total sales over July 2013 to date."

    High-end sales "spiked" in October from September, thanks to the launch of Marina One Residences, which sold 335 units over the month at a median price of $2,228 per sq ft, notes Mr Lee.

    He expects demand for shoebox apartments - units up to 506 sq ft - to be more at risk than larger homes due to the "untested rental market for the large supply of shoebox units that will be completed next year".

    The prevailing rents for shoebox units may have been skewed upwards as the smaller completed supply means the market has not really been tested yet.

    Mr Lee also notes that 84 per cent of the 12,000 shoebox units sold since 2009 are outside the city centre, so "their capital values could come under pressure if rental yields decline significantly below current expectations".

    OCBC Investment Research also tips new home sales to stay soft at between 8,000 and 10,000 units next year.

    While some in the industry hope that cooling measures like stamp duties will be reviewed, OCBC expects that will happen only "when residential price declines approach a meaningful threshold of 10 per cent".

    Deputy Prime Minister Tharman Shanmugaratnam said in a speech in October that private property prices still have "some distance to go in achieving a meaningful correction after the sharp run-up in prices in recent years".

    This could happen in the second half of next year or later, said the OCBC report.

    It also prefers large developers with strong balance sheets, a diversified regional presence and portfolios with significant investment asset exposures.

    [email][email protected][/email]

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    Didnt know 84% of MM supply is in OCR.
    The MM OCR rental may drop to a small premium above a HDB master bedroom rental.
    If that happens, MM OCR prices should drop to around a 3rm HDB flat price


    Quote Originally Posted by reporter2 View Post
    [url]http://www.straitstimes.com/archive/friday/premium/money/story/mass-market-homes-face-price-pressure-20141205[/url]

    [B]OCBC report also says capital values of shoebox units could be tested[/B]

    Published on Dec 5, 2014 1:00 AM

    By Marissa Lee

    He expects demand for shoebox apartments - units up to 506 sq ft - to be more at risk than larger homes due to the

    Mr Lee also notes that 84 per cent of the 12,000 shoebox units sold since 2009 are outside the city centre, so "their capital values could come under pressure if rental yields decline significantly below current expectations".

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    Quote Originally Posted by k00L View Post
    Didnt know 84% of MM supply is in OCR.
    The MM OCR rental may drop to a small premium above a HDB master bedroom rental.
    If that happens, MM OCR prices should drop to around a 3rm HDB flat price
    Didnt know kOOL is actually teddybear in disguise too.
    "[I]Never argue with an idiot, or he will drag you down to his level and beat you with experience[/I]."

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    The fire sale of OCR MM should start in the summer of 2015 when Yellen hikes interest rates by 25bps, followed by another hike in end 2015.
    Sibor should reach 1%. Poor rentability will make it a -ve carry trade
    Recommend sell now for OCR MM before too late


    [B]Desperate homeowners launch fire sales of shoebox flats[/B]

    The flat glut will only intensify.

    Shoebox flats had seemed like the perfect investment property a number of years ago. These units, typically with a floor area less than 50 square meters, hooked penny-pinching investors because of their affordability and the cheap downpayment outlay that they required.

    However, homeowners who bought shoebox flats as investment properties will soon find that these tiny homes will fail to deliver promised profits. According to CIMB, distressed sales of shoebox flats is likely in 2015 to 2016, as sellers struggle to eke out a profit in the soft market.

    “The trigger for the distressed sales of suburban small-formats may come from rising vacancy rates. Smaller units are typically bought for investments, but investors will find themselves hitting a soft market caused by the cutback in foreign labour and ballooning property supply,” noted CIMB.

    CIMB further warned that banks may see some non-performing loans from these mortgages. “But as LTVs for investment properties are lower, the ticket size of each loan is smaller and the smaller price quantum of these products is more likely to find a secondary buyer, we do not expect mortgage NPLs to balloon. The developers that are aggressive on the small-format trend tend to be the small developers, but most have sold off their stock,” CIMB stated.

    - See more at: [url]http://m.sbr.com.sg/residential-property/news/desperate-homeowners-launch-fire-sales-shoebox-flats#sthash.ym7WEw8f.dpuf[/url]

  5. #5
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    you sound exactly like Teddybear
    "[I]Never argue with an idiot, or he will drag you down to his level and beat you with experience[/I]."

  6. #6
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    Rental of OCR HDB has faced difficulty in securing tenants 6 months ago. It will face more competition when hdb upgraders start to release more flats for rental when their condos are ready. IMO, hdb prices will continue to drop in the next two quarters.
    Quote Originally Posted by k00L View Post
    Didnt know 84% of MM supply is in OCR.
    The MM OCR rental may drop to a small premium above a HDB master bedroom rental.
    If that happens, MM OCR prices should drop to around a 3rm HDB flat price

  7. #7
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    Rental of new MM at aljunied mrt stn is about $2000. How much can a new OCR MM get?
    Quote Originally Posted by k00L View Post
    The fire sale of OCR MM should start in the summer of 2015 when Yellen hikes interest rates by 25bps, followed by another hike in end 2015.
    Sibor should reach 1%. Poor rentability will make it a -ve carry trade
    Recommend sell now for OCR MM before too late


    [B]Desperate homeowners launch fire sales of shoebox flats[/B]

    The flat glut will only intensify.

    Shoebox flats had seemed like the perfect investment property a number of years ago. These units, typically with a floor area less than 50 square meters, hooked penny-pinching investors because of their affordability and the cheap downpayment outlay that they required.

    However, homeowners who bought shoebox flats as investment properties will soon find that these tiny homes will fail to deliver promised profits. According to CIMB, distressed sales of shoebox flats is likely in 2015 to 2016, as sellers struggle to eke out a profit in the soft market.

    “The trigger for the distressed sales of suburban small-formats may come from rising vacancy rates. Smaller units are typically bought for investments, but investors will find themselves hitting a soft market caused by the cutback in foreign labour and ballooning property supply,” noted CIMB.

    CIMB further warned that banks may see some non-performing loans from these mortgages. “But as LTVs for investment properties are lower, the ticket size of each loan is smaller and the smaller price quantum of these products is more likely to find a secondary buyer, we do not expect mortgage NPLs to balloon. The developers that are aggressive on the small-format trend tend to be the small developers, but most have sold off their stock,” CIMB stated.

    - See more at: [url]http://m.sbr.com.sg/residential-property/news/desperate-homeowners-launch-fire-sales-shoebox-flats#sthash.ym7WEw8f.dpuf[/url]

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    Quote Originally Posted by DC33_2008 View Post
    Rental of new MM at aljunied mrt stn is about $2000. How much can a new OCR MM get?
    Paid $750k for a OCR MM can rent out at $2000 only now???
    Only collect $1500 after deducted maintenance fee, pty tax, agent comm, etc .... So sad

    HDB $350k is renting at about $1500 liao
    Last edited by Rysk; 13th December 2014 at 11:12 AM.

  9. #9
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    Well, game is over for the MM especially those in OCR.
    Quote Originally Posted by Rysk View Post
    Paid $750k for a OCR MM can rent out at $2000 only now???
    Only collect $1500 after deducted maintenance fee, pty tax, agent comm, etc .... So sad

    HDB $350k is renting at about $1500 liao

  10. #10
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    Quote Originally Posted by DC33_2008 View Post
    Well, game is over for the MM especially those in OCR.

    This is the map of Singapore, do you know how tiny RCR and CCR is relative to OCR?



    If OCR is all the same then you might as well call every elderly man with the same family name as PAPA or Daddy
    "[I]Never argue with an idiot, or he will drag you down to his level and beat you with experience[/I]."

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