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Has Private or Public Housing Performed Better? New Book Timing the Property Market Singapore Property News This Week
FROM THE
EDITOR
Welcome to the 73th edition of the Singapore Property Weekly. Hope you like it! Mr. Propwise
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population in Singapore being housed in Housing Development Board (HDB) flats, the supply and pricing of public housing is a significant factor that affects the demand for and hence pricing of private housing. In this article we will look at the relative price performance of private (as represented by the URA Private Residential PPI) and public (as represented by the HDB Resale Price Index) housing.
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SINGAPORE PROPERTY WEEKLY Issue 73 fashion. As of 2012Q2 the PPI stood at 206.9 versus the HDB RPI of 194.
From Figure 2.2.1a, we can see that the Private PPI had massively outperformed the HDB Resale Price Index (RPI) until the end of 1994, when the outperformance rapidly contracted. Since then, it has moved largely in line with the HDB RPI, but in a more volatile
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Except for a sharp spike in the HDB Resale Price Index in 1993Q2-Q3 as the government moved to market-based pricing for public housing, HDB prices have tended to be
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SINGAPORE PROPERTY WEEKLY Issue 73 less volatile (especially on the downside) versus the Private PPI (Figure 2.2.1b). In 2012Q2, the PPI rose by 0.4% while the HDB Resale Price Index had a 1.3% gain. 34.9% (since 1990Q1), making HDB flats look relatively expensive versus private property on a historical comparison. Looking at the compounded annual growth rates Another way to look at this issue is to calculate the compounded annualized growth rates of the PPI versus the HDB Resale Price Index. Over a 22-year period from 1990Q1 to 2012Q2, the PPI gained 5.8% per year versus the HDB Resale Price Index which gained 7.9% per year. Thus it is clear that HDB flats have appreciated significantly more than private property during this time period. The issue is that given where the relative affordability of private property versus HDB flats is currently, the same might no longer hold true for todays buyers of public housing.
The premium of the URA PPI has fallen from close to 100% in the early 1990s to 6.6% in 2012Q2, way below the historical average of
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SINGAPORE PROPERTY WEEKLY Issue 73 Certainly there are quality differences to be taken into account (HDB flats today are almost of a similar quality to private property, except without facilities), but it should no longer be an automatic assumption that HDB flats will continue to outperform private property as they have in the past two decades. This article is adapted from Timing the Property Market Invest Profitably in Singapore Real Estate By Using Market Cycles and Insights, a new book by Mr. Propwise.
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SINGAPORE PROPERTY WEEKLY Issue 73 As one reader put it, were always constantly on the verge of prices going both up and down! You also cannot (and should not) rely solely on what your property agent tells you. While there are many honest professional agents out there, lets be realistic and say they have an inherent conflict of interest they make their money by getting you to transact, not by helping you to make a good decision. That was one of the main reasons why I started Propwise.sg, a Singapore property blog dedicated to helping you understand the real estate market and make better buying, selling, renting and investing decisions. You can find most of the basic knowledge you need to get started there. Introducing Timing the Property Market in Singapore Real Estate By Using Market Cycles and Insights takes it up a notch by doing a deep dive into the real estate data to help property investors time their property purchases for maximum profit and minimum downside. Most of the charts and data are taken from PropertyMarketInsights.com, a web-based research and analysis membership site that covers all segments of the Singapore property market. PropertyMarketInsights.coms goal is to help buyers and sellers make profitable investment decisions by providing them with professional-level analysis at a very reasonable cost. This book is split into six sections covering: Overall Market Analysis Non-Landed Residential Property
SINGAPORE PROPERTY WEEKLY Issue 73 Residential Areas and Projects Commercial and Industrial Property forward, we have exciting plans lined up for more interesting content and also bringing on other expert voices in the property market. I sincerely hope that this site and its content have been helpful to you.
I believe that even seasoned property investors will learn a thing or two by reading this book, as Ive not seen some of the analyses in this book done anywhere else. By timing your property investment at the right part of the cycle, you can avoid costly mistakes that could set you back years, and potentially add hundreds of thousands of dollars to your net worth. On a personal note, Id like to thank all readers of Propwise.sg for your continued support over the past two years. Going
Click here to read a sample chapter and to buy the e-book version of Timing the Property Market. Published by Aktive Learning, the paperback version will be available at major bookstores by late October and retails at S$28 + GST. All PropertyMarketInsights.com subscribers will get a FREE e-book copy of this book.
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transaction
Transactions volume in GCBAs fell from 18 transactions at $358.8 million in Q2 to 14 transactions at $285.1 million in Q3. The recent cooling measures (cap on housing loan tenure, lower LTV ratio) are unlikely to have an impact on GCB buyers who tends to be high-net worth individuals. The slowdown in Q3 could be due to the pent-up demand being fulfilled in Q2, or a residual effect of the SSD introduced early in 2011.The current transaction volume year-to-date stands at 41 transactions at $868 million and may hit 50 to 55 transactions totalling $1 billion
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SINGAPORE PROPERTY WEEKLY Issue 73 to $1.1 billion by end-2012 if there are three to four GCBs deals each month. Prices are expected to remain stable. (Source: Business Times) Adjacent Chee Hoon parcels up for sale freehold GCB 99-year leasehold Woodlands EC site attract $150.2m top bid The site at Woodlands Avenue 6 and Woodlands Drive 16 drew a top bid of $150.18 million, or $302 psf ppr from a 70-30 Opal Star - Binjai Holdings joint venture, beating out four other bidders. The plan is to build eight 12-storey residential blocks with a total of 447 units consisting of mainly threeand four-bedroom units. The estimated breakeven cost and selling price are $600650 psf and $680-730 psf respectively. (Source: Business Times)
The two adjacent land parcels (18,989 sq ft and 26,166 sq ft) located at Jalan Asuhan, off University Road in the Chee Hoon Avenue Good Class Bungalow Area are asking for $1,600-$1,800 psf or $72.2 million to $81.3 million by private treaty. Buyers have the option of purchasing one or both parcels, which offers a panoramic view since it is one of the highest points in the area. It is accessible via Dunearn, Bukit Timah and Adam roads. (Source: Business Times)
HSR: residential prices to slow in Q4, but unlikely to fall in next 12 months
Before the announcement of the 35-year cap on loan tenures and lower LTV ratios, HDB resale prices and private non-landed homes
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SINGAPORE PROPERTY WEEKLY Issue 73 prices are expected to increase by 2-2.5% and 0.8% next quarter respectively. However, with the introduction of the new cooling measures, these will fall to a 0.5% and 00.5% increase respectively. While prices are unlikely to fall given the low interest rate and market liquidity, sales may slow as some buyers (though a negligible umber) are priced out by the higher monthly instalments from the lower loan tenure, and other buyers postpone buying until the market corrects itself. (Source: Business Times) Commercial Prime office rents slip further even as vacancies fall Despite the fall in Grade A vacancies from 7.9% in Q2 to 6.8% in Q3 (11.8% to 9.8% in Marina Bay sub-market; 1.5% to 2% in
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Orchard Road), the overall Grade A rent declined by 3.6% to $9.13 psf in Q3, with the biggest fall of 2.5% and 3.9% in Marina Bay and Raffles Place respectively. Rents in the City Hall and Marina Centre vicinity declined 1.8%. The fall in vacancies is encouraging given the slower economic growth and uncertain global economy and despite the falling rental rates, the decline is slower than in the first half of the year. While a further fall in vacancies that would help to stabilise rents in the CBD is expected, the upcoming 1.2 million sq ft of vacant space over the next 6 months would prevent short-term recovery.
first-storey
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SINGAPORE PROPERTY WEEKLY Issue 73 upper-storey industrial space climbed 4% to $600 psf and 3.5% to $445 psf in Q3 from Q2 respectively while rents for the former and the latter remained stable at $2.15 psf per month and $1.75 psf per month respectively. Hi-tech industrial rents increased slightly by 0.07% from Q2 to $3 psf per month in Q3. The increasing resale prices points to an increase in speculation in the industrial property sector, which may be due to the lack of a seller's stamp duty for commercial properties that imposes a penalty on buyers who sell their units within a short period of time, and the lower overall quantum of such properties. Furthermore, there are more investors shifting from residential to industrial properties since they have the highest yields and interest remains low, thus offering high returns. While some believes that the market is not overheated yet and does not need more cooling measures, citing increased
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demand and better locations as alternative reasons for rising prices, others suggests that speculation crowding out genuine industrialists may lead to the government introducing measures such as seller's stamp duty or limits to the LTV ratio. (Source: Business Times) Business park sector to remain stable
The average rents for business and science parks in Q3 2012 are $3.70 psf per month, the same as Q2 while the vacancy rates slipped from 7.5% in Q2 to 6.9% in Q3. This is due to the companies high precommitment to the upcoming space, the relocation of MNCs from the CBD to business parks seeking lower rental rates. This sector is expected remain stable for the next three to six months with lease renewals, tenant upgrades from old to newer buildings,
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SINGAPORE PROPERTY WEEKLY Issue 73 despite an upcoming 1.04 million sq ft NLA in Q4 since 71% of the upcoming space are precommitted. with the rest for commercial purpose, in line with URAs guidelines for hotel development. Some thought the bid aggressive but estimates the 5% net yield based on a $460,000 breakeven cost per hotel room and current room rates at V Hotel Lavender, a hotel under Forward Land. Furthermore, hotel room rates for this segment are expected to improve, and demand to come from benefit from sports tourism with the completion of Sports Hub in the future. Others however thought the bid reasonable for its location and permitted uses, being located near Lavender MRT station and a few stops from the city centre with nearby amenities. (Source: Business Times)
The 0.84 hectare site zoned for hotel development or commercial and residential development and located at the corner of Jalan Sultan and Victoria Street attracted a top bid of $331.34 million, or $993.71 psf ppr from Forward Land, beating out eight other bids. The top bid is 8.3% higher than the next highest bid. 60% of the 333,433 sq ft maximum allowable GFA which can generate around 650 hotel rooms will be for hotel use
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Non-Landed Residential Resale Property Transactions for the Week of Sep 26 Oct 2
Postal District 2 2 3 3 4 5 5 5 7 8 8 8 8 9 9 9 9 9 9 9 9 9 9 9 10 Project Name THE BEACON THE BEACON CENTRAL GREEN CONDOMINIUM EMERALD PARK CARIBBEAN AT KEPPEL BAY VENTANA DOVER PARKVIEW VILLA DE WEST BURLINGTON SQUARE CITYLIGHTS MERA SPRINGS KERRISDALE URBAN LOFTS PATERSON SUITES SCOTTS 28 THE TRILLIUM RIVERIA GARDENS URBANA THE INSPIRA CAIRNHILL CREST TRIBECA ASPEN HEIGHTS WATERFORD RESIDENCE UE SQUARE ORION Area (sqft) 1,109 1,163 1,292 926 1,249 1,270 936 1,012 667 721 1,550 1,259 786 1,679 1,733 1,399 1,432 1,313 936 1,733 1,378 1,324 1,044 1,055 1,776 Transacted Price ($) 1,550,000 1,530,000 1,630,000 1,030,000 1,900,000 1,590,000 970,000 1,025,000 918,000 1,226,000 2,080,000 1,510,000 930,000 4,790,000 4,028,888 3,217,700 2,960,000 2,626,000 1,860,000 3,300,000 2,500,000 2,118,000 1,630,000 1,635,250 4,100,000 Price Tenure ($ psf) 1,398 99 1,316 99 1,262 99 1,113 99 1,522 99 1,252 FH 1,036 99 1,013 FH 1,376 99 1,700 99 1,342 FH 1,199 99 1,184 FH 2,853 FH 2,325 FH 2,299 FH 2,068 FH 2,000 FH 1,986 FH 1,904 FH 1,814 FH 1,600 999 1,561 999 1,550 929 2,308 FH Postal District 10 10 10 10 10 10 10 10 10 10 10 10 10 11 11 11 11 11 12 12 12 12 12 13 13 Project Name J C DRAYCOTT CUSCADEN RESIDENCES ORION SOMMERVILLE PARK SHANGHAI ONE JERVOIS LODGE KASTURINA LODGE WARNER COURT VILLAGE TOWER GLENTREES DORMER PARK OLINA LODGE THE SIERRA SKY@ELEVEN THE LINCOLN RESIDENCES THOMSON EURO-ASIA ADAM PARK CONDOMINIUM MINBU COURT DE ROYALE PARC HAVEN ONE ST MICHAEL'S RIO GARDENS ROCCA BALESTIER ONE LEICESTER WAN THO LODGE Area (sqft) 850 1,496 1,507 624 560 1,238 797 1,195 1,830 1,991 1,238 1,281 1,206 2,713 1,841 1,130 1,173 1,270 1,281 452 1,259 947 1,109 1,249 1,152 Transacted Price ($) 1,800,000 3,150,000 3,080,000 1,080,000 880,000 1,940,000 1,218,000 1,760,000 2,600,000 2,800,000 1,700,000 1,750,000 1,510,000 4,612,100 3,059,000 1,830,000 1,410,000 1,380,000 1,730,000 590,000 1,478,000 985,000 1,108,000 1,600,000 1,068,000 Price Tenure ($ psf) 2,117 FH 2,105 FH 2,044 FH 1,730 FH 1,572 FH 1,567 FH 1,529 FH 1,473 FH 1,421 FH 1,406 999 1,373 FH 1,366 FH 1,253 947 1,700 FH 1,662 FH 1,619 FH 1,202 FH 1,086 FH 1,351 FH 1,305 FH 1,174 FH 1,040 FH 999 FH 1,281 FH 927 FH
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NOTE: This data only covers non-landed residential resale property transactions with caveats lodged with the Singapore Land Authority. Typically, caveats are lodged at least 2-3 weeks after a purchaser signs an OTP, hence the lagged nature of the data.
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