singapore property weekly issue 217

8/20/2019 Singapore Property Weekly Issue 217

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Issue 217Copyright © 2011-2014 www.Propwise.sg. All Rights Reserved.

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CONTENTS

p2 7 Reasons Why Property Prices Won’t

p8 Singapore Property News This Week

p13 Resale Property Transactions

(July 1 – July 7 )

Welcome to the 217th edition of the

Singapore Property Weekly .

Hope you like it!

Mr. Propwise

FROM THE

EDITOR

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SINGAPORE PROPERTY WEEKLY Issue 217

Page | 2Back to Contents

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.

7 Reasons Why Property Prices Won’t

http://propertysoul.com/author/propertysoul/http://www.straitstimes.com/business/property/time-to-review-property-cooling-measureshttp://www.straitstimes.com/business/property/time-to-review-property-cooling-measureshttp://www.straitstimes.com/business/property/time-to-review-property-cooling-measureshttp://www.straitstimes.com/business/property/time-to-review-property-cooling-measureshttp://www.straitstimes.com/business/property/time-to-review-property-cooling-measureshttp://www.straitstimes.com/business/property/time-to-review-property-cooling-measureshttp://www.straitstimes.com/business/property/time-to-review-property-cooling-measureshttp://www.straitstimes.com/business/property/time-to-review-property-cooling-measureshttp://www.straitstimes.com/business/property/time-to-review-property-cooling-measureshttp://www.straitstimes.com/business/property/time-to-review-property-cooling-measureshttp://www.straitstimes.com/business/property/time-to-review-property-cooling-measureshttp://www.straitstimes.com/business/property/time-to-review-property-cooling-measureshttp://www.straitstimes.com/business/property/time-to-review-property-cooling-measureshttp://propertysoul.com/author/propertysoul/http://propertysoul.com/author/propertysoul/http://propertysoul.com/author/propertysoul/


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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 Rickards’s 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 measurestaken to stimulate the property market back in

year 2005? The loan-to-value limit was raised

to 90%. But not many buyers were interested.

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 activistgovernment 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

https://en.wikipedia.org/wiki/Charles_P._Kindlebergerhttps://en.wikipedia.org/wiki/Charles_P._Kindlebergerhttps://en.wikipedia.org/wiki/Charles_P._Kindlebergerhttps://en.wikipedia.org/wiki/Charles_P._Kindlebergerhttps://en.wikipedia.org/wiki/Charles_P._Kindleberger


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from the brink of collapse and demonstrated

how powerful and cash-rich the government

is (and compared with China’s $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 itsown?

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,

hat kind of population growth do we need in

Singapore to absorb the surplus?

Like what Rickards says: “In the end, if you

build it, they may not come, and a hard

landing will follow.”

3. Wealth Effect

Rickards points out the fact that two assetclasses – 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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4. Wealth Inequality

The wealth effect only benefits the “haves”,

not the “don’t haves”.

Wealth becomes heavily concentrated in theprivileged 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 o

inflation.

5. Asset Bubble

Cheap money widens the disparity between

the rising costs of housing and the

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 doesn’tcome 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 networth of people who are asset rich in

properties diminishes with the deflated asset

bubble.

6. Asymmetric Information

Many buyers are looking for great bargains inthis 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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However, not all sellers letting go of their

properties now are desperate sellers. They

refuse to sell at unreasonably-low prices and

ithdraw their properties from the market.

The see-saw situation results in fewer

properties for sale and lower transaction

volumes every quarter.

7. Self-fulfilling Expectations

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.

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.

Unfortunately, the near-zero-interest rate

discourages savings which has depleted bank

savings and fixed deposits in the past fewyears. 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.

SINGAPORE PROPERTY WEEKLY I 217


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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.

SINGAPORE PROPERTY WEEKLY I 217

http://propertysoul.com/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://propertymarketinsights.com/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://aktive.com.sg/store/no-b-s-guide-to-property-investment/http://propertysoul.com/


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Singapore Property This Week


Residential

D ev e lo p e r s s o l d 4 2% f e w e r p r i v a te h o m e s

i n J u n e

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

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: c o n do r en ts d o w n b y 0.5% w h i le

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.

SINGAPORE PROPERTY WEEKLY Iss e 217


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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

rents. Lim believes that the weak private

residential market will continue to impact the

HDB rental market such that rents will remain

low.


P r iv at e r es i d en t i al r es al e p r ic es d r o p b y

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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Also, the overall median transaction over X-

value (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 consecutivemonth that the TOX was at zero.


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

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.


M ND : H DB i s r es p o n s ib l e f o r r ec ti fy i n g

defects i n BTO and n ot DBSS f l ats

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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of the flat. Lee added that the structural

integrity and safety of buildings are a priority

and should not be compromised.


Commercial

I n c r e a s i n g i n t e r e s t r a t e s m a y n o t b e b a d

for o f f i ce capi tal val ues

While interest rates have increased over the

last year, it may not necessarily have anegative 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 quartershere the three-month Sibor rose, the office

PPI increased in 60% of them. This could be

because interest rates usually rise in tandem

ith economic growth. As the economy

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 theincrease in demand. As such, a higher

interest rate may not always be bad news for

the office market.


P r o p e r t y m a r k e t u n l i k e l y t o r e b o u n d e v e n i f coo l i ng m easures are rel axed

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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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.



http://www.moneymatters.sg/


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

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

1 MARINA BAY RESIDENCES 732 1,600,000 2,186 993 DOMAIN 21 883 1,300,000 1,473 99

3 QUEENS 1,195 1,500,000 1,255 99

3 QUEENS 1,184 1,430,000 1,208 99

3 QUEENS 1,184 1,420,000 1,199 99

4 REFLECTIONS AT KEPPEL BAY 1,550 2,550,000 1,645 99

4 CARIBBEAN AT KEPPEL BAY 1,281 1,950,000 1,522 99

4 CARIBBEAN AT KEPPEL BAY 1,227 1,860,000 1,516 99

4 THE INTERLACE 1,464 1,700,000 1,161 99

4 TERESA VILLE 1,959 2,000,000 1,021 FH5 PASIR PANJANG LODGE 1,249 1,100,000 881 FH

8 KERRISDALE 1,259 1,290,000 1,024 99

9 URBAN SUITES 1,572 4,150,000 2,641 FH

9 THE COSMOPOLITAN 1,399 2,965,000 2,119 FH

9 RIVERGATE 1,894 3,700,000 1,953 FH

9 ORCHARD TOWERS 1,970 2,538,000 1,288 FH

11 THE LINC 1,851 2,900,000 1,566 FH

11 NEWTON LODGE 1,216 1,650,000 1,357 FH

12 THE INTERWEAVE 344 635,000 1,844 FH14 THE SUNNY SPRING 1,023 1,022,000 999 FH

15 THE VIEW @ MEYER 1,851 3,000,000 1,620 FH

15 THE SEA VIEW 1,647 2,620,168 1,591 FH

15 THE SEAFRONT ON MEYER 1,604 2,480,000 1,546 FH

Postal


Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

15 THE SEA VIEW 1,647 2,450,000 1,488 FH15 CAMELOT BY-THE-WATER 2,637 3,800,000 1,441 99

15 EVERITT EDGE 484 690,000 1,425 FH

15 THE MAKENA 1,152 1,470,000 1,276 FH

15 CRYSTAL RHU 1,281 1,580,000 1,233 FH

15 LAGUNA PARK 1,615 1,420,000 879 99

15 NEPTUNE COURT 1,270 1,080,000 850 99

16 COSTA DEL SOL 1,227 1,630,000 1,328 99

16 BREEZE BY THE EAST 2,045 2,050,000 1,002 FH

16 SUNHAVEN 2,034 1,580,000 777 FH17 HEDGES PARK CONDOMINIUM 1,001 960,000 959 99

18 OASIS @ ELIAS 1,389 1,100,000 792 99

19 PRIMO RESIDENCES 603 828,000 1,374 FH

19 OASIS GARDEN 1,227 1,438,000 1,172 FH

19 THE MINTON 1,109 1,220,000 1,100 99

19 KENSINGTON PARK CONDOMINIUM 1,668 1,700,000 1,019 999

19 CHUAN PARK 1,528 1,350,000 883 99

20 THOMSON IMPERIAL COURT 2,142 1,650,000 770 FH

21 SIGNATURE PARK 1,033 1,130,000 1,094 FH21 SPRINGDALE CONDOMINIUM 1,152 1,188,888 1,032 999

21 SOUTHAVEN I 1,442 1,190,000 825 99

22 THE LAKEFRONT RESIDENCES 764 1,030,000 1,348 99

22 THE CENTRIS 1,292 1,250,000 968 99



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NOTE: This data only covers non-landed residential resale propertytransactions with caveats lodged with the Singapore Land Authority.Typically, caveats are lodged at least 2-3 weeks after a purchasersigns an OTP, hence the lagged nature of the data.

Postal


Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

22 THE MAYFAIR 893 850,000 951 99

22 THE LAKEFRONT RESIDENCES 2,422 2,204,020 910 99

22 PARC VISTA 1,259 1,095,000 869 99

22 LAKEPOINT CONDOMINIUM 2,217 1,180,000 532 99

23 HILLVIEW REGENCY 1,119 1,050,000 938 99

23 GUILIN VIEW 1,259 1,068,000 848 99

25 WOODHAVEN 592 730,000 1,233 99

25 WOODHAVEN 700 790,000 1,129 99

26 MEADOWS @ PEIRCE 1,184 1,380,000 1,166 FH

27 ORCHID PARK CONDOMINIUM 1,668 1,120,000 671 99

singapore property weekly issue 217

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