RESIDENTIAL MARKET
Signs of property market cooling; hot spots remain
The various measures to cool the property market have borne encouraging signs, but trouble spots in the form of shoe-box units and rising mass market prices remain, said National Development Minister Khaw Boon Wan in Parliament yesterday.
As of the end of the first quarter of this year, there are about 2,500 completed shoe-box apartments (defined as units of less than 700 sq ft), which make up 1.2 per cent of the 210,000 non-landed units in the private housing stock. Looking ahead, this stock is expected to increase to about 9,700 by 2015.
While about 80 per cent of the completed units are located in the Central Region, many of the new units will be located in the heartlands, where their appeal to tenants remains untested, said Mr Khaw.
Separately, mass market property prices outside the Central Region have continued to rise, even as private housing prices have started to stabilise in the central region, noted Mr Khaw.
A combination of the measures rolled out thus far, have produced some results, noted Mr Khaw.
Private home prices registered a marginal decline in Q1 this year for the first time, following nine consecutive quarters of moderating price increases. In addition, the proportion of sub-sales in the market, a proxy for the level of property speculation, has fallen sharply to about 4 per cent. The additional buyer's stamp duty (ABSD) has also helped reduce the proportion of private residential property bought by foreigners and companies to 7 per cent.
"In the public housing market, most first-timers now have a chance to select a BTO flat if they apply for one. HDB resale prices have also moderated, increasing by 0.6 per cent in Q1 2012. This is the smallest price growth in recent years," added Mr Khaw.
Source: Business Times – 15 May 2012
Sentiment index rises after falling 4 quarters
AFTER declining for four consecutive quarters, the Redas-NUS Real Estate Sentiment Index (composite) increased in the first quarter of this year to 4.6, buoyed by recent strong demand at some mass-market private condo launches.
At its nadir in Q4 last year, the index was 3.3. It dropped for four consecutive quarters since Q4 2010, when it was 5.7.
The index ranges from 0 to 10, with a score below 5 indicating deteriorating market conditions while a score above 5 shows improving market conditions.
The index was minted by Real Estate Developers' Association of Singapore (Redas) and National University of Singapore's Department of Real Estate (DRE). The Current Sentiment Index rose from 3.5 in Q4 2011 to 4.8 in Q1 2012. For this index, respondents are asked to rate overall Singapore real estate market conditions now compared with six months ago.
The Future Sentiment Index, where respondents rate overall property market conditions over the next six months, improved from 3.1 for Q4 2011 to 4.4 in Q1 2012.
As a result, the Composite Sentiment Index, which is the average of the two indices, increased from 3.3 in Q4 2011 to 4.6 in Q1 2012.
Seventy-seven per cent of the developers surveyed expect more residential units to be launched over the next six months, up significantly from 54 per cent in Q4 2011. Only 5 per cent expect fewer launches, down from 28 per cent in Q4 2011.
Forty-six per cent of developers expect prices to hold at the current level for the next half-year, up from 25 per cent previously; 19 per cent expect moderately higher pricing while the remaining 35 per cent anticipate a moderately lower price trend.
In contrast, for the Q4 2011 survey, 67 per cent of developers predicted prices softening in the following six months.
Overall, respondents in the latest Q1 survey are cautiously optimistic about the outlook for Singapore's real estate market, returning better net balances in current and future performance scores than the previous quarter.
Expectations for the residential sector were mixed. Current net balance of the suburban residential sector rebounded from -26 per cent in Q4 2011 to +24 per cent in Q1 2012, but survey respondents were less optimistic over the sector's performance in the next six months, with a -6 per cent future net balance, though this is a better showing than the -57 per cent future net balance in the previous survey. For the prime residential sector, current net balance remained at -67 per cent but future net balance improved from -79 per cent in Q4 2011 to -48 per cent for Q1 2012.
Net balance is the difference between the percentage of respondents with positive expectations and the percentage of people who have negative expectations.
Survey respondents were also asked about their views on methods to cool aggressive land bidding. A majority (68 per cent) agreed that simultaneous Government Land Sales site launches could moderate aggressive bids at tenders.
Market watchers note that this is already being practised by the government, and this may have prompted a survey correspondent to suggest: "Tenders should close on the same day, rather than launched on the same day with different closing dates, to reduce competition for sites and aggressive bidding."
In the past, market watchers have remarked to BT that having tender closings for two or more GLS sites on the same day - which used to be the case in the past, for instance, in 1996 and 1997 - tends to favour bigger developers with strong financial muscle to pick up two or more sites at one go and helps them eliminate competition from smaller or financially weaker players with capacity to buy only one site.
Forty-two per cent of the Redas-NUS Q1 2012 survey respondents disagreed with the view that an open auction system would be more effective than the highest-price sealed bid tender system in mitigating aggressive land prices. As a survey correspondent remarked: "An open auction system would moderate aggressive land bidding if there is visibly less or no competition at the auction. However, for prime located sites, an open auction system would fuel aggressive land bidding especially with strong competition present at auction."
Source: Business Times – 15 May 2012
Developers rush to meet marketing rules deadline
DEVELOPERS are warning of administrative headaches in the changeover to new rules this Friday requiring them to be more transparent in the marketing of their projects.
A check with developers by The Straits Times found that most are ready to meet the deadline on Friday.
Developers say that while they do not anticipate major challenges in complying with the new rules, the sales process will become much more complicated.
There will be an increase in paperwork, especially for projects with units left unsold at the time of the change.
They will need two versions of sales and purchase agreements and options to purchase - one for sales before May18 and another set after. Each will have different contractual obligations.
This means that even if a few units in a launched project are unsold, the developer must use the new versions of the purchase documents mandated by the Urban Redevelopment Authority (URA) for all sales from Friday onwards.
The URA made changes to its Housing Developers Rules last month, requiring developers to give more information in writing on the project and unit to buyers before the option to purchase is issued.
This first phase of changes to ensure that 'what you see is what you get' requires developers to provide a drawn-to-scale project location plan and site plans. They must also give a unit floor plan and a breakdown of a unit's floor area by spaces such as bedrooms, balconies and bay windows.
Other new requirements include getting the consent of home buyers before making changes such as adjustments to a unit's layout.
Mr Lee Liat Yeang, a partner at Rodyk & Davidson's Real Estate Practice Group, noted that industry players feel the preparation time given for the new rules to be implemented is too short, especially since they are also applicable to projects which have been partly sold before this Friday.
Source: The Straits Times – 15 May 2012
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