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27 July 2013

Suburban sales drive up private home prices
1% increase in Q2 more than expected; but momentum unlikely to continue

Source: Straits Times 
By Melissa Tan

HIGH demand for suburban mass-market units helped drive overall private home prices up 1 per cent in the second quarter.

This was a touch higher than a flash estimate of 0.8 per cent earlier this month and also outstripped the 0.6 per cent growth posted in the first quarter.

Analysts said the pick-up in pace as shown in Urban Redevelopment Authority (URA) data out yesterday suggested that market fundamentals remained solid.

But they added that the momentum was unlikely to continue due to home loan caps imposed by the Monetary Authority of Singapore late last month.

The overall increase was propelled by strong sales in the suburban mass-market segment, where prices jumped 3.8 per cent in the second quarter compared with a 1.4 per cent rise in the first three months of the year.

Suburban home prices also grew at 3.8 per cent in the final quarter of last year, but then came the tough cooling measures in January. These initially took some steam out of the market until the second-quarter rebound.

The main reason for the price jump was the launch of 738-unit J Gateway in Jurong late last month, analysts said. The project moved all units but one on its launch day, at a median price of $1,486 per sq ft.

City-fringe prices maintained a 0.2 per cent growth rate in the second quarter, the same pace as in the preceding three months.

But city centre prices slid 0.2 per cent in April through last month, their first decline since last year's first quarter. The drop came after high-end home prices grew 0.6 per cent in the first quarter to hit an all-time high.

"This could indicate that developers and unit owners in the high-end market are beginning to succumb to the pressure of persistent weak demand by adjusting prices to move sales," said Colliers International research and advisory head Chia Siew Chuin.

Developers' launch volumes tumbled 21 per cent from the first quarter to 4,395 units, excluding executive condominiums (ECs), in the second quarter. New sales also fell, down 16 per cent to 4,538 units.

Resale transactions dipped 1.1 per cent to 1,982 units in the quarter but were 48 per cent lower compared with the same three months last year. "The secondary market for private homes has weakened to a level close to that during the global crisis," noted Jones Lang LaSalle Singapore research director Ong Teck Hui.

OrangeTee research head Christine Li said overall volumes could drop by as much as 15 per cent this year over last year.

"The increase in pipeline supply together with the rising vacancy rate amid cooling measures could put downward pressure on prices in the near to medium term."

URA said 11,998 units, including ECs, will be completed in this half of the year with 21,235 homes expected to be built next year.

HDB resale price rise slows down as market stabilises

Source: Straits Times 
By Charissa Yong

PUBLIC housing flat resale prices grew at a slower pace in the second quarter of this year, as a combination of cooling measures and a steady supply of new flats hit harder.

In the lowest quarterly growth since 2009, the Housing Board's resale price index rose 0.5 per cent during April to last month.

This was less than half the 1.3 per cent growth experienced during the same period last year and in the first quarter this year. Analysts said this was expected and signalled a stabilising market.

Cooling measures have curbed demand and buyers are less able to afford more expensive flats, said ERA Realty key executive officer Eugene Lim.

In January, the Monetary Authority of Singapore restricted the proportion of income buyers can use to pay off their mortgage.

"Buyers may have to compromise and go for cheaper flats which are smaller or flats that are in less premium locations, as their buying power has been limited," said Mr Lim.

HDB launched a record 27,000 new flats last year, and plans to release 25,000 more this year. It launched 15,000 new and balance flats - those left over from previous sales exercises - in the first half of the year.

This has drawn young couples and home buyers without urgent housing needs away from buying resale flats, said Mr Lim.

Eligible singles, who might otherwise buy resale flats, will be able to apply for new two-room flats in non-mature estates for the first time in this month's upcoming Build-To-Order (BTO) exercise.

Overall median prices have begun to soften for bigger flats, said OrangeTee head of research and consultancy Christine Li.

Median cash premiums above a flat's valuation also continued to decline, dipping to $26,000 from $32,000 the previous quarter, said PropNex chief executive Mohamed Ismail. "Some genuine first-time home buyers are possibly finding it a good time to look for a good deal (in the resale market)... instead of waiting for three years for a new BTO."

He said this might explain why more flats changed hands in the second quarter. Resale transactions rose 21 per cent to 5,235 cases, up from the previous quarter's 16-year low of 4,335 cases.

But SLP International's head of research Nicholas Mak said this was a "slight rebound" and actually fairly small, given the average of 7,600 transactions per quarter over the past 10 years.

Sellers also preferred to rent out rather than sell their flats, analysts noted. Subletting transactions increased 6 per cent, from 7,410 in the first quarter to 7,891 cases in the second.

"(Flat owners) do not have an incentive to sell and upgrade as private residential market prices are at its all-time high," said Mr Ismail.

Cracks start to show in private rental sector
Rents rise, but at slower pace amid risk of oversupply and labour curbs

Source: Straits Times | Money 
By Melissa Tan

THE good times may be coming to an end in the private rental market with oversupply and tighter immigration policies taking a toll, say analysts.

New figures from the Urban Redevelopment Authority (URA) yesterday show that while the sector is still robust, cracks are beginning to appear.

Rents grew at 0.3 per cent in the second quarter of this year from the preceding three months - this was the 15th consecutive quarter of increase but well down from the 0.8 per cent quarter-on- quarter rise recorded in the first three months of the year.

Analysts said the declining pace of rental rises will continue this year and may stagnate, and rentals may even drop.

They pointed to one key factor - a reduced pool of potential tenants as the Government reduces the inflow of foreign labour.

"With looming supply as the vacancy rate creeps up, coupled with curbs on foreign worker employment and their accommodation allowance, overall private housing rents could see further moderation," said Knight Frank Singapore's research head Alice Tan.

The vacancy rate for completed private homes climbed from 5.2 per cent as at March 31 to 5.6 per cent as at June 30, the URA said yesterday.

This is because supply has outstripped demand.

On one hand, the stock of completed private homes grew by 2,704 units in the second quarter, representing a 22.7 per cent increase in net new supply from the preceding quarter.

But the net new take-up figure plunged 44.8 per cent to 1,403 units in the same period.

CBRE Research associate director Desmond Sim noted: "The vacancy numbers are to be closely watched. If the vacancy rate increases significantly, there may be a risk of oversupply."

There were 5,834 units built in the first six months of this year with a further 11,998 expected to be completed in the second half - a total of 17,832, the URA said.

An estimated 66,329 private units and 10,790 executive condominium units will be completed over the next three years.

R'ST Research director Ong Kah Seng said rents have already increased "considerably" over last year, and have now reached levels where they meet resistance from tenants.

This applies especially to homes in the city fringe and suburban regions where rents touched record highs near the end of last year, he added.

City-fringe rents eked out a meagre 0.1 per cent increase in the second quarter from the preceding three months, continuing the same pace of growth as in the first quarter. They rose 2.7 per cent last year from 2011.

Incidentally, a city fringe district - Outram - had the highest median rental yield islandwide at around 4.6 per cent in the first half of this year, according to a report by the Singapore Real Estate Exchange earlier this month. Projects in this area include Dorsett Residences and Emerald Garden.

Suburban private home rents grew 4.1 per cent year-on-year last year.

They remained flat in the second quarter from the preceding three months after climbing 0.8 per cent in January through March from the final quarter of last year.

Rents for city-centre homes increased 0.8 per cent in the first quarter but were up just 0.5 per cent in the second three-month period. They grew 1.6 per cent over last year.

Analysts said city-centre rents could continue to fall as tenants seek cheaper rents due to reductions in their housing allowances.


With looming supply as the vacancy rate creeps up, coupled with curbs on foreign worker employment and their accommodation allowance, overall private housing rents could see further moderation.

- Knight Frank Singapore research head Alice Tan


The vacancy numbers are to be closely watched. If the vacancy rate increases significantly, there may be a risk of oversupply.

- CBRE Research associate director Desmond Sim

Architect wins bid for land sale profit
Appeal court overturns decision that denied him a share of $12m proceeds

Source: Straits Times 
By K. C. Vijayan Senior Law Correspondent

AN ARCHITECT stands to gain more than $1 million after winning a legal tussle over two pieces of land along River Valley Road.

Mr Lim Koon Park, 47, had a verbal agreement with two men that entitled him to a 25 per cent share of the net profits when the plots were sold.

But he ended up receiving nothing after the $60 million sale.

And when he took the case to court last year, a judge ruled that the agreement did not apply as the land had not been sold within an agreed four-month time frame.

Now, however, he is in line for a significant chunk of the profits after the Court of Appeal reversed the decision.

The architect and his partners - banker Bryan Yap and developer Andy Lim - had acquired the plots for $48.5 million in the heady days before the 2008 financial crisis.

They struck the oral agreement to share the profits in a ratio of 2:1:1, with Mr Yap receiving the largest slice.

The idea was to sell the land - which includes a former petrol station - to a developer. But their plans were delayed by the 2008 recession.

When the plots were finally sold the following year, the architect was not given his share.

He took legal action but Mr Yap successfully argued that their agreement applied only if the land was sold within four months.

On Monday, however, the Court of Appeal overturned the decision, saying the previous judge had "erred" and that the architect was entitled to his 25 per cent.

It also dismissed a claim that he had misrepresented the plot ratio for the land where the petrol station stood. The allegation was made by Mr Yap, who argued that the architect had misled him.

But the three-judge court found no evidence of this. In judgment grounds, it said Mr Yap had "got exactly what he bargained for".

The land, which was sold for a $12 million gross profit, is being developed into a mixed-used multi-storey building.

After expenses are deducted, the trio are likely to have more than $6 million left to share according to the agreed ratio.

Mr Lim Koon Park was awarded full legal costs. He was represented by Senior Counsel Chelva Rajah and lawyer V.N. Srinivasan while Senior Counsel Sarjit Singh Gill and lawyer Georgina Lum defended Mr Yap.

About the case

Architect Lim Koon Park, banker Bryan Yap and developer Andy Lim bought two plots of land on River Valley Road for $48.5 million before the 2008 financial crisis.
The land, which includes a former petrol station, was sold for a $12 million gross profit in 2009
After expenses, the profit is likely to be more than $6 million

Popular homes close to nature, shopping malls
Checking out the page views on the STProperty website gives an instant snapshot of what projects buyers are keen on. This week, we look at the developments in districts 21 and 22 which have drawn the most attention.

Source: Straits Times | Money 
By Rachel Scully

NATURE lovers will be drawn to District 21 which covers the Upper Bukit Timah, Clementi Park and Ulu Pandan areas.

A prominent landmark in the district is Singapore's highest point - Bukit Timah Hill - in the Bukit Timah Nature Reserve.

Home buyers will be served by the Downtown MRT line, which runs from Bukit Panjang to Bugis, when it is completed in a few years.

Topping the list of private homes by page views on STProperty's website between July 15 and 21 was 928-unit Signature Park.

The freehold project offered two-, three- and more bedder units at an average asking price of $1,209 per sq ft (psf).

It is near the famous Bukit Timah Market and Food Centre and rows of shophouses offering a mix of food choices and cuisines.

The development with the highest average asking price in District 21 was freehold Jardin, opposite King Albert Park.

Among its 140 units ranging from one-, two-, three- and more bedder units, the average asking price based on listings last week was $1,966 psf. It also registered the highest average transacted price among the top five between January and last month at $1,876 psf, based on data from the Urban Redevelopment Authority.

Farther west lies District 22, which spans Jurong, Lakeside, Boon Lay and Tuas.

Residential, commercial and industrial property can be found in this district. Some iconic buildings include the Science Centre, shopping malls IMM, Jurong Point and newly opened Jem.

The East-West MRT line cuts through the area and can take home buyers to Singapore's Central Business District.

The project with the most number of page views on STProperty last week was the recently launched J Gateway.

The 99-year leasehold condo in Jurong East sold all but one of its 738 units when it was launched last month.

That was the first time since January's property cooling measures that buyers snapped up almost all the units on the first day of a launch.

It had an average asking price of $1,465 psf on STProperty between July 15 and 21.

Rounding out the top five by page views were 99-year leaseholds such as Caspian, Parc Oasis, Parc Vista as well as The Lakefront Residences.