Issue 217

Copyright 2011-2014 www.Propwise.sg. All Rights Reserved.

CONTENTS
p2

7 Reasons Why Property Prices Wont

p8

Singapore Property News This Week

p13

Resale Property Transactions

FROM THE

EDITOR

Welcome to the 217th edition of the

Singapore Property Weekly.
Hope you like it!
Mr. Propwise

(July 1 July 7 )

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SINGAPORE PROPERTY WEEKLY Issue 217

7 Reasons Why Property Prices Wont

Recover Soon
By Property Soul (guest contributor)

There was a recent article in the Straits Times

with the headline Time to review property
cooling measures. The argument is that as: i.
Private home prices are down ii. HDB flat
prices have dropped iii. Oversupply has
worsened iv. Rents have weakened v. Interest
rates have risen vi. The real estate industry
has shed jobs, it may be time for the
government to review the cooling measures.
Many people fail to see that the government
can only do so much to cool or stimulate the
property market.

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SINGAPORE PROPERTY WEEKLY Issue 217

After all, it is an open market and there are
many factors that can lead to the continual
boom or downturn of the market, such as
supply and demand, the economic outlook,
market confidence, etc.

I am re-reading James Rickardss book The

Death of Money: The Coming Collapse of the
International Monetary System. Below are
some new inspirations from this interesting
read.
1. Regime Uncertainty

When the Singapore government finally

decides to withdraw the cooling measures, it
may do little to help restore fallen prices.
Remember those government measures
taken to stimulate the property market back in
year 2005? The loan-to-value limit was raised
to 90%. But not many buyers were interested.

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The regime uncertainty theory from Charles

Kindleberger explains the reason behind the
lack of investment during the Great
Depression:
even when market prices have declined
sufficiently to attract investors back into the
economy, investors may still refrain because
unsteady public policy makes it impossible to
calculate returns with any degree of accuracy
the added uncertainty caused by activist
government policy ostensibly designed to
improve conditions that typically makes
matters worse.
From mid-June, stocks in China tumbled 30
percent from their seven-year high. Then the
Chinese
government
and
Chinese
brokerages suddenly announced drastic
measures to revive the stock market. The
intervention might have saved the market
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SINGAPORE PROPERTY WEEKLY Issue 217

from the brink of collapse and demonstrated
how powerful and cash-rich the government
is (and compared with Chinas $3 trillion
reserves the money spent is just peanuts).
However, the whole incident exposes the
vulnerability of the fundamentals and further
undermines the market confidence of the
investors.
After all, who needs government to step in if a
market is healthy enough to recover on its
own?

2. Market Oversupply
With 24,800 vacant private homes, an
additional 22,000 to be completed this year,
and another 21,000 to be ready next year,
what kind of population growth do we need in
Singapore to absorb the surplus?

Like what Rickards says: In the end, if you

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build it, they may not come, and a hard

landing will follow.
3. Wealth Effect
Rickards points out the fact that two asset
classes stocks and housing represent the
wealth of most people (which is certainly the
case in Singapore). When prices of stocks
and properties go up, people feel richer and
more prosperous and are willing to save less
and spend more.
It is a chicken-and-egg situation: Low
borrowing rates and easy money make
properties
look
affordable,
attracting
Singaporeans to put more money in
properties, thus driving property prices to new
highs.
The same happens in reverse on the way
down.

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SINGAPORE PROPERTY WEEKLY Issue 217

4. Wealth Inequality
The wealth effect only benefits the haves,
not the dont haves.
Wealth becomes heavily concentrated in the
privileged class who own properties, or
businesses who own a stake in the industry
(property developers, real estate agencies,
banks, brokers, etc.).
When prices are rising faster than wages,
housing becomes unaffordable for the
common people who are the end consumers
of all the housing products. The average
people do not get anything from inflated
housing prices, except the adverse effect of
inflation.

5. Asset Bubble
Cheap money widens the disparity between
the rising costs of housing and the
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unchanged affordability of home buyers, all

disguised under the continual growth of debt.
But many people fail to see that this wealth
effect is superficial in the sense that it doesnt
come from real economic growth of the
country. In other words, the booming property
market is not created out of an increase in
productivity, trade surplus or foreign direct
investment.

When the real estate market softens, the net

worth of people who are asset rich in
properties diminishes with the deflated asset
bubble.
6. Asymmetric Information
Many buyers are looking for great bargains in
this market. They assume that sellers would
hang on to their properties if they are not so
desperate to sell. This belief causes buyers to
lower the prices they are willing to pay.
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SINGAPORE PROPERTY WEEKLY Issue 217

However, not all sellers letting go of their
properties now are desperate sellers. They
refuse to sell at unreasonably-low prices and
withdraw their properties from the market.
The see-saw situation results in fewer
properties for sale and lower transaction
volumes every quarter.

A persistent depressed market, coupled with

adverse factors like supply glut, interest rate
hike, soft rental market, etc., requires strong
holding power to tide through the storm. And
holding power means having healthy level of
cash reserves and high liquidity of other
assets.

7. Self-fulfilling Expectations

Unfortunately, the near-zero-interest rate

discourages savings which has depleted bank
savings and fixed deposits in the past few
years. The market can be more vulnerable
than what it appears to be. The loss of market
confidence can trigger a ripple effect which
causes frenzied dumping to cover losses.

Buyers are sitting on the fence and holding

back home purchases. Investors are losing
appetite for property investment and looking
for a safe haven to park their wealth. The
drop in transaction volumes and prices
eventually
becomes
a
self-fulfilling
expectation.

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SINGAPORE PROPERTY WEEKLY Issue 217

It doesn't matter what the industry
stakeholders are saying. It is still early to say
that the Singapore property market is
recovering. To be prudent investors, take the
hint from James Rickards:

The key to wealth preservation is to

understand the complex processes and to
seek shelter from the cascade.
By guest contributor Property Soul, a
successful property investor, blogger, and
author of the No B.S. Guide to Property
Investment.

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SINGAPORE PROPERTY WEEKLY Issue 217

Singapore Property This Week

Residential
Developers sold 42% fewer private homes
in June
In June, developers sold 372 private homes.
This was 42% lower than the 643 private
homes sold in May. Not only so, developers
have been cutting back on the supply of new
homes. According to data from URA, no new
projects were launched in June. On the other
hand, buyers have also been negatively
impacted by cooling measures such as the
total debt servicing ratio that restricts buyers
ability to finance their properties. This has led
market experts to believe that the

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government will not be lifting the cooling

measures any time soon. Desmond Sim from
CBRE Research believes that developers
would sell about 6,000 to 7,000 private
homes this year. However, Chia Siew Chuin
from Colliers International believes that
buyers will return to the market if project units
are reasonably priced.

(Source: Business Times)

SRX: condo rents down by 0.5% while
HDB rents up by 0.1%
According to the Business Times, the
residential leasing market remains weak in
June due to a limited pool of tenants.

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SINGAPORE PROPERTY WEEKLY Issue 217

In June, rents of private condos and
apartments slipped by 0.5% month-on-month.
Particularly, rents in the city suffered the
largest drop as rents fell by 0.8%. Rents in
the suburban region also fell by 0.7%.
However, rents in the city-fringes remained
the same. On the other hand, rental volumes
rose by 1% to 3,777 units in June, up from
the 3,739 units rented in May. Eugene Lim
from ERA Realty said that the increase in
rental volumes was not due to demand.
Instead, he believes tenants are moving
because they have found another place with
a lower rent or is of better quality. In the HDB
rental market, rents have increased by 0.1%
month-on-month in June. Five-room HDB
flats saw the highest increase in rents by
1.2%. Three-room flats also experienced a
0.3% increase in rents. However, four-room
and executive flats recorded a 0.5% fall in
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rents. Lim believes that the weak private

residential market will continue to impact the
HDB rental market such that rents will remain
low.
(Source: Business Times)
Private residential resale prices drop by
1.6% year-on-year
Data from SRX showed that year-on-year,
non-landed private residential resale prices
have fallen by 1.6% year-on-year, this June.
Particularly, in the core central region, and
outside central region, private residential
resale prices have fallen by 7.1% and 2.3%
respectively. However, resale prices in the
city fringes have climbed by 6%.
Nonetheless, the overall resale price index for
non-landed private homes has increased by
0.4% month-on-month in June from May.

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SINGAPORE PROPERTY WEEKLY Issue 217

Also, the overall median transaction over Xvalue (TOX) remained zero in June. Eugene
Lim from ERA Realty believes that this may
indicate that prices in the resale market have
stabilised as this is the third consecutive
month that the TOX was at zero.
(Source: Business Times)
Q2 GCB sales increases to $282m
In Q2 this year, a total of 11 good class
bungalows (GCBs) changed hands. This
totals up to $282.3 million, up from the 4
deals that were completed in the first quarter.
Not only so, in June, a record price per
square foot was achieved for a furnished
bungalow in Bishopsgate at $2,190 psf. The
bungalow which had two storeys and a
basement was sold for a total of $33 million.
According to Newsman Realty, buyers
interest in GCBs has increased over the last
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three months. Newsman Realty believes that

the value of GCB transactions this year may
even exceed $700 million as sellers are more
realistic about pricing expectations.
(Source: Business Times)
MND: HDB is responsible for rectifying
defects in BTO and not DBSS flats
According to the Ministry of National
Development, HDB is responsible for
rectifying defects in BTO flats, while private
developers are responsible for the flaws in
DBSS projects. However, HDB may be roped
in to help DBSS developers resolve matters.
Desmond Lee Minister of State for National
Development said that HDB provides broad
planning parameters and sets the buyers
eligibility requirements. As such, private
developers of DBSS projects are responsible
for the design, pricing and construction quality
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SINGAPORE PROPERTY WEEKLY Issue 217

of the flat. Lee added that the structural
integrity and safety of buildings are a priority
and should not be compromised.
(Source: Business Times)
Commercial
Increasing interest rates may not be bad
for office capital values
While interest rates have increased over the
last year, it may not necessarily have a
negative impact on office capital values. An
analysis in the Business Times which mapped
the movement of office property price index
(PPI) in relation to the three-month Singapore
interbank offer rate (Sibor) from Q3 1987 to
Q1 2015, showed that of all the quarters
where the three-month Sibor rose, the office
PPI increased in 60% of them. This could be
because interest rates usually rise in tandem
with economic growth. As the economy
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grows, investors confidence in real estate

investments may also increase. This will prop
up demand for real estate. Not only so,
property prices may increase further when the
current inventory does not satisfy the
increase in demand. As such, a higher
interest rate may not always be bad news for
the office market.
(Source: Business Times)

Property market unlikely to rebound even

if cooling measures are relaxed
According to a property seminar by the Real
Estate Developers Association of Singapore
(Reads), the property market is unlikely to
rebound even if some cooling measures were
to be relaxed. Chua Hak Bin from the Bank of
America Merrill Lynch believes that the
property market will stagnate in the next few
years.
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SINGAPORE PROPERTY WEEKLY Issue 217

It is believed that the oversupply of private
housing, the low demand and the rising
vacancy rate will further weaken the property
market. Not only so, manufacturing activities
have remained subdued and the supply of
multiple-user factory space has exceeded
demand. This has pushed rental prices down,
said Lee Nai Jia from DTZ. Christine Li from
Cushman & Wakefield added that office
leases as a proportion of total leases by floor
area has fallen to only 4% in H1 this year,
down from 15% in 2014. Alice Tan from
Knight Frank also cautioned that the retail
market outlook may not be optimistic if
existing market conditions persist.
(Source: Business Times)

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SINGAPORE PROPERTY WEEKLY Issue 217

Non-Landed Residential Resale Property Transactions for the Week of Jul 1 Jul 7

Postal
District
1
3
3
3
3
4
4
4
4
4
5
8
9
9
9
9
11
11
12
14
15
15
15

Project Name
MARINA BAY RESIDENCES
DOMAIN 21
QUEENS
QUEENS
QUEENS
REFLECTIONS AT KEPPEL BAY
CARIBBEAN AT KEPPEL BAY
CARIBBEAN AT KEPPEL BAY
THE INTERLACE
TERESA VILLE
PASIR PANJANG LODGE
KERRISDALE
URBAN SUITES
THE COSMOPOLITAN
RIVERGATE
ORCHARD TOWERS
THE LINC
NEWTON LODGE
THE INTERWEAVE
THE SUNNY SPRING
THE VIEW @ MEYER
THE SEA VIEW
THE SEAFRONT ON MEYER

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Area
(sqft)
732
883
1,195
1,184
1,184
1,550
1,281
1,227
1,464
1,959
1,249
1,259
1,572
1,399
1,894
1,970
1,851
1,216
344
1,023
1,851
1,647
1,604

Transacted
Price ($)
1,600,000
1,300,000
1,500,000
1,430,000
1,420,000
2,550,000
1,950,000
1,860,000
1,700,000
2,000,000
1,100,000
1,290,000
4,150,000
2,965,000
3,700,000
2,538,000
2,900,000
1,650,000
635,000
1,022,000
3,000,000
2,620,168
2,480,000

Price
Tenure
($ psf)
2,186
99
1,473
99
1,255
99
1,208
99
1,199
99
1,645
99
1,522
99
1,516
99
1,161
99
1,021
FH
881
FH
1,024
99
2,641
FH
2,119
FH
1,953
FH
1,288
FH
1,566
FH
1,357
FH
1,844
FH
999
FH
1,620
FH
1,591
FH
1,546
FH

Postal
District
15
15
15
15
15
15
15
16
16
16
17
18
19
19
19
19
19
20
21
21
21
22
22

Project Name
THE SEA VIEW
CAMELOT BY-THE-WATER
EVERITT EDGE
THE MAKENA
CRYSTAL RHU
LAGUNA PARK
NEPTUNE COURT
COSTA DEL SOL
BREEZE BY THE EAST
SUNHAVEN
HEDGES PARK CONDOMINIUM
OASIS @ ELIAS
PRIMO RESIDENCES
OASIS GARDEN
THE MINTON
KENSINGTON PARK CONDOMINIUM
CHUAN PARK
THOMSON IMPERIAL COURT
SIGNATURE PARK
SPRINGDALE CONDOMINIUM
SOUTHAVEN I
THE LAKEFRONT RESIDENCES
THE CENTRIS

Area
(sqft)
1,647
2,637
484
1,152
1,281
1,615
1,270
1,227
2,045
2,034
1,001
1,389
603
1,227
1,109
1,668
1,528
2,142
1,033
1,152
1,442
764
1,292

Transacted
Price ($)
2,450,000
3,800,000
690,000
1,470,000
1,580,000
1,420,000
1,080,000
1,630,000
2,050,000
1,580,000
960,000
1,100,000
828,000
1,438,000
1,220,000
1,700,000
1,350,000
1,650,000
1,130,000
1,188,888
1,190,000
1,030,000
1,250,000

Price
Tenure
($ psf)
1,488
FH
1,441
99
1,425
FH
1,276
FH
1,233
FH
879
99
850
99
1,328
99
1,002
FH
777
FH
959
99
792
99
1,374
FH
1,172
FH
1,100
99
1,019 999
883
99
770
FH
1,094
FH
1,032 999
825
99
1,348
99
968
99

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SINGAPORE PROPERTY WEEKLY Issue 217

Postal
District
22
22
22
22
23
23
25
25
26
27

Project Name
THE MAYFAIR
THE LAKEFRONT RESIDENCES
PARC VISTA
LAKEPOINT CONDOMINIUM
HILLVIEW REGENCY
GUILIN VIEW
WOODHAVEN
WOODHAVEN
MEADOWS @ PEIRCE
ORCHID PARK CONDOMINIUM

Area
(sqft)
893
2,422
1,259
2,217
1,119
1,259
592
700
1,184
1,668

Transacted
Price ($)
850,000
2,204,020
1,095,000
1,180,000
1,050,000
1,068,000
730,000
790,000
1,380,000
1,120,000

Price
Tenure
($ psf)
951
99
910
99
869
99
532
99
938
99
848
99
1,233 99
1,129 99
1,166 FH
671
99

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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