Singapore Properties

Singapore Property Market 1H 2018

At MortgageWise, we try to provide our property investor clients with a snapshot of the performance of Singapore residential property market regularly through our own basket of condos which will provide supplementary insights in a more meaningful and personal manner than just a broad-based index from URA. Properties are not created equal and some will rise or fall more than the rest.

Compare All Latest Rates 2018

 

The condos selected in the basket are deemed iconic enough to be representative of prices in a particular precinct that is smaller than a whole central region or outside central region as defined by URA.  For areas outside central region we also tend to pick condos either right at or nearest MRT stations as these tend to be well sought after by investors.  Our basket would allow property investors to see the actual variation in prices over time for a particular group of condos that are fairly well-known in Singapore.  However our illustration is nothing more than simple averages of all transactions done over 6-month periods and in cases where there are less than 5 transactions (marked with an asterisk) do take the reading with a pinch of salt.  We also highlight the highest psf achieved in the period.

We will look at the performance of the basket of condos in the most recent 6-month period, and contrast that with the preceding 6-month.  Percentage variation of more than 5% will deemed significant enough to be highlighted (in blue for increase and in red for decline).

singapore property market 2018

 

The effect of the most recent round of cooling measures in 2018 announced on 6 July will not be seen in this set of numbers. In that announcement earlier in the month, the government has cited that it took just 4 quarters for PPI (Property Price Index) to recover back 9.1% of its total decline of 11.6% in the last 15 quarters as seen below.

PPI property price index singapore 2018 Q2

 

Our basket of iconic condos also largely reflected that trend with most of the average psf prices in blue reflecting solid increases especially for investment-grade condos in district 9 the likes of Cosmopolitan, Rivergate in River Valley or Robertson Quay.  All of the transactions done at these two popular condos favoured by investors are above $2,000 psf in the 6-month period – an impressive record indeed.

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We also see average psf (a more reliable indicator than highest psf achieved) prices rise meaningfully for mass market condos all over the island east west or north.  More than half of them register above 5% increase in transacted prices over the 2 periods of study, with the best performer J-Gateway in the Jurong Lake District and Glades in the Tanah Merah/Airport precinct.

 

What will be more interesting is our next property market reporting around end of January 2019 when we will examine if all these prices hold up in the face of the harsh cooling measures.  So stay tuned.

 

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest trends in the industry, providing useful mortgage tips, and making sense of rate movements. We aim to build trust with clients for longer term partnership and not just do product-pushing for a one-time deals unlike bankers. That’s why we always present “whole-of-market” perspective including packages that banks do not pay us.  See our clients’ testimonials.

 

Compare All Latest Rates 2018

 

 

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Residential Rental Market Q1 2018

At MortgageWise, we aim to provide our property investor clients with a snapshot of the performance of Singapore residential rental market regularly through our own basket of condos which provides more meaningful and personal insights than just a broad-based index from URA. After all, properties are not created equal and some will rise or fall more than the rest.

Compare All Latest Rates 2018

 

The condos selected in the basket are deemed iconic enough to be representative of prices in a particular precinct that is smaller than a whole central region or outside central region as defined by URA.  For areas outside central region we pick condos either right at or near to MRT stations as these tend to be well sought after by investors.  Property investors can then gauge how much their units in the same precinct could technically command after adjusting for distance, age, etc. after comparing with this basket of fairly well-known and popular condos in Singapore.  However, our illustration is nothing more than simple averages of all transactions done over 6-month periods (all data from URA) so do take the reading with a pinch of salt.

We also indicate the highest rent achieved in the period so investors who do happen to have a unit at these same condos will know they are getting a reasonably good rate if their rent is somewhere between the average and the highest rent signed.

singapore residential rental market 2018

 

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest trends in the industry, providing useful mortgage tips, and making sense of rate movements.  We aim to build trust with clients for longer term partnership and not just do product-pushing for a one-time deal unlike bankers.  That’s why we always present “whole-of-market” perspective including packages that banks do not pay us.  That’s why many have chosen to work with us in the end notwithstanding the sheer number of brokers and agents out there.  See their testimonials.

 

Compare All Latest Rates 2018

 

 

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good singapore property

Singapore Property Market In 2017

At MortgageWise, we try to provide our property investor clients with a snapshot of the performance of Singapore residential property market regularly through our own basket of condos which will provide supplementary insights in a more meaningful and personal manner than just a broad-based index from URA. Properties are not created equal and some will rise or fall more than the rest.

 

The condos selected in the basket are deemed iconic enough to be representative of prices in a particular precinct that is smaller than a whole central region or outside central region as defined by URA.  For areas outside central region we also tend to pick condos either right at or nearest MRT stations as these tend to be well sought after by investors.  Our basket would allow property investors to see the actual variation in prices over time for a particular group of condos that are fairly well-known in Singapore.  However our illustration is nothing more than simple averages of all transactions done over 6-month periods and in cases where there are less than 5 transactions (marked with an asterisk) do take the reading with a pinch of salt.  We also highlight the highest psf achieved in the period.

Compare All Latest Rates 2018

 

So now let us take a look at our basket of condos and their performance over the 2 halves of 2017.  The double-digit percentage change in psf prices are highlighted for you in blue (rise) and red (fall).

Singapore property market

 

First immediate observation is that the property market indeed has turned over from a period of sustaining drop in average transacted psf prices.  Most of the condos in our basket has increased its transaction prices in 2nd half of 2017 with the exception of only a handful with the biggest drop at The Glades condo in the East.  However, on closer look it is because these are the remaining bigger units that the developer has finally sold out at the completed condo after one year thereby pulling down the average psf prices when compared with the earlier 6-month period where most of the developer units sold were smaller 2/3 bedders.

 

In fact, one exceptional performer that registered a double-digit increase in average psf prices is the famous D’Leedon condo at Farrer Road that boasts of over 1,700 units developed by Capitaland.  For such a massive prime district 10 condo with significant number of sellers to do an average price uptick of over 10% does indicate the tide has turned in favour of sellers.  What is more remarkable is that the same condo facing a supply glut at one stage actually dropped seen average transacted psf prices dropped from $1,527 (in 2016 2nd half) to $1,255.

 

Of noteworthy mention is that even at the luxury segment, our benchmark condo Ardmore Park has continued its momentum of increasing average transacted prices from 2.8% (based on our previous comparison in Aug 2017) to now 4.4%, albeit the highest price achieved has come down.

 

 

On the whole, the prices in luxury and prime distrct have improved but those in the city-fringe (with the exception of D’Leedon) and outskirts have remained plateau or even gone down somewhat which signals continued weakness in the mass market property prices due to vacant units.

 

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest trends in the industry, providing useful mortgage tips, and making sense of rate movements.  We aim to build trust with clients for longer term partnership and not just do product-pushing for a one-time deal unlike bankers.  That’s why we always present “whole-of-market” perspective including packages that banks do not pay us.  That’s why many have chosen to work with us in the end notwithstanding the sheer number of brokers and agents out there.  See their testimonials.

 

Compare All Latest Rates 2018

 

 

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braddell view

En Bloc Craze 2017 Vs 2007

Last week, URA released the property market statistics for Q3 2017 with the broad market index increasing by 0.7% compared to the previous quarter.  What is more noteworthy is how the authorities took effort to outline the potential new supply coming onto the market by end of 2018 to 2019 as a result of recent spate of en bloc deals – a whopping 9,300!

 

Together with new supply from government land sales, this will add almost 17,000 new units or double the supply that is already in the pipeline (with planning approvals) for launch next few years.

Compare All Latest Rates 2018

 

Here’s a brief summary of all the high-profile en bloc deals which all started with Shunfu Ville last year 2016, and the pace is fast and furious from 2nd half of 2017 onwards averagining almost one a month:

 

MonthEnbloc Condo Enbloc Price
2016 MayShunfu Ville (HUDC)$638m by Qingjian Realty
2017 MayRio Casa (HUDC)$575m by Oxley Holdings
2017 JunEunos Ville (HUDC)$766m by MCL Land
2017 JulSerangoon Ville (HUDC)$499m by Oxley Holdings (consortium)
2017 AugTampines Court (HUDC)$970m by Sim Lian Group
2017 OctAmber Park$906.7m by CDL
2017 OctNormanton Park (HUDC)$830.1m by Kingsford
2017 OctChangi Garden$248.8m by CEL (Chip Eng Seng)
2017 NovWho’s Next?

 

 

As most developers are now buying en bloc sites at record psf ppr for fear of missing out on land bank replenishment, the intriguing question on most mind’s woud be – at what prices would all these new condos be launched at in 2019?

 

Exactly a decade ago, those who were active in the property market back in 2007 will remember how the property cycle started with en bloc sales in prime district 9/10 in Singapore including one massive en bloc deal of a HUDC estate Farrer Court for a record-setting $1.338b sold to Capitaland (now D’Leedon).  That is the first en bloc deal to cross the magic $1b mark in Singapore.  The next likely project to cross the $1b or perhaps even $2b might be Braddel View coming up.

Compare All Latest Rates 2018

 

With supply taken out in relatively short time and people being displaced from homes during the ensuing contruction phase in Singapore’s prime district where you see cranes everywhere, soon after demand filters down to city-fringe and mass markets (en bloc sellers downgrading).  This time round though, the en bloc craze started with Shunfu Ville HUDC estate in outskirts and by 2nd half 2017 became more broad-based as more owners sensed the hunger of developers topping up their land bank in anticipation of a pick up in demand from 2018 onwards.

 

 

Besides how the en bloc fever has started from the mass market, we think the biggest difference in the current en bloc craze 2017 versus 2007 is this – we now have TDSR (Total Debt Servicing Ratio) at 60% firmly in place, along with ABSD (Additional Buyer’s Stamp Duty).  What this means is that how much of a person can borrow, in terms of his monthly mortgage repayment calculated at 3.5% interest (mandated by MAS) together with all his other monthly debts, is capped at 60% of his monthly qualified income.  In other words, someone in his mid-thirties who earns a fixed monthly income of $8,000 with no other borrowings could get a maximum loan of around $1m and buy a property up to $1.25m (80% loan).  Likewise, a strong dual-income couple who earns $8,000 each with no other borrowings but with a first mortgage at $3,000 monthly would be able to get a loan of $1.4m.  However, because this is a 2nd mortgage for an investment property, the maximum LTV (loan-to-value) gets reduced to 50%.  Technically the couple is good for a purchase up to $2.8m if they are prepared to put down cash of another $1.4m.  Most wouldn’t.  And not to mention there is another set of costs at 7% ABSD (for Singaporeans buying a 2nd investment property) which is paid in cold hard cash or CPF.

 

The biggest challenge for developers now is pricing strategy in 2019 especially for those buying lands outside the central area where URA has stipulated in Sep 2012, in a bid to rein in shoebox units, that all new developments must have a minimum average unit size of not less than 70 sqm.  This central area covers mostly CBD/Marina Bay and prime district 9 Orchard (up to Balmoral), a region which has already gone through en bloc renewal in the 2007 cycle.

Compare All Latest Rates 2018

 

The per square foot price of launches in 2019 from these new en bloc sites would definitely be much higher entrenching what is already a two-tiered pricing property market in Singapore in the last five years where $1.5m would get you a large 1400 sqft 3-bedder in an old development but only a 2-bedder that is less than half the size.  One can no longer compare location based on psf between older and newer condos (generally those less than five years old) – otherwise you would not be able to justify paying $1400-1500 psf for a unit at Watertown in Punggol.

 

Does this mean the new supply from 2019 would be grossly overpriced?  No I do not think so.  Just like all things in life, a renewal process is needed to ensure older developments that is no longer in good state of repairs is slowly being replaced by newer swanky designs.  And there is a general organic inflation over time for all things including cost of accommodation.  The younger population with rising affluence would also aspire newer and better living environments as the country matures.  There is nothing wrong with that.  The issue only comes when there is excessive exuberance on the part of owners and developers that cause this organic inflation rate for land costs and new launch prices to shoot up too quickly and spiral into a form of asset bubble.  Personally, I think that is unlikely to happen now with TDSR in place as it puts a dampener on buying capacity or demand to start with.  The onus really is on developer’s space planning and pricing.  Still I think most launches in 2019 will take a longer time to sell out unless of course some one price their project at the most affordable range at reduced margins, or ABSD for foreigners is tweaked to bring in additional demand to the market.

 

Remember the property market is dynamic in nature.  I believe TDSR itself as a credit policy would also need to be adjusted over time when the government recognize the unaffordability of new condos and move it up to 70% to satisfy the electorate’s rising aspirations for quality living.  It will be interesting to see how all these forces play out over the next two years.

 

Our advice to those looking to enter the market, do it sooner than later.  In fact, do it in the next few months before 2018 begins which typically see more buyers in the market in the 1st half of the year.  Plus you could still lock down interest rates from as low as 1.30%!  Speak to our consultants today and also find out how you could save $700 in legal fees when you apply for your private property purchase loan through us!

 

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest trends in the industry, providing useful mortgage tips, and making sense of rate movements. We aim to build trust with clients for longer term partnership and not just do product-pushing for a one-time deal unlike bankers. That’s why we always present “whole-of-market” perspective including packages that banks do not pay us. That’s why many have chosen to work with us in the end notwithstanding the sheer number of brokers and agents out there. See their testimonials.

 

Compare All Latest Rates 2018

 

 

 

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Residential Rental Market Q3 2017

At MortgageWise, we aim to provide our property investor clients with a snapshot of the performance of Singapore residential rental market regularly through our own basket of condos which provides more meaningful and personal insights than just a broad-based index from URA. Properties are not created equal and some will rise or fall more than the rest.

Compare All Latest Rates 2018

 

The condos selected in the basket are deemed iconic enough to be representative of prices in a particular precinct that is smaller than a whole central region or outside central region as defined by URA.  For areas outside central region we pick condos either right at or nearest MRT stations as these tend to be well sought after by investors.  Our basket would allow property investors to see the actual variation in prices over time for a group of fairly well-known and popular condos in Singapore.  However, our illustration is nothing more than simple averages of all transactions done over 6-month periods (all data from URA) so do take the reading with a pinch of salt.  We also highlight the highest rental achieved in the period.

 

We will look at the average rentals and highest rent achieved for last 6-month period (Apr to Sep 2017) and contrast that with the previous 6-month period (Oct 2016 to Mar 2017).  We will highlight double-digit percentage change (above 10% for average and above 20% for mode) for you in blue (increase) and red (decline).

 

singapore residential rental market 2017

 

It is a mixed bag performance in the last 6 months with both falling and rising average rentals across the island in our condo basket, so it will be hard to comment on trends.  It is best left to the individual investors to mull over the specific readings in the various precincts.

Compare All Latest Rates 2018

 

We do noted however there are definitely more blue readings (over 10% increase) in the highest rent achieved in the most recent 6-month period.  This suggests in general there are more units that “out-perform” the average rentals, or in other words, the premium or choice units in these developments are able to command higher rents than in 2016.

 

This trend is even more evident in the prime district of Orchard, River Valley, Marina Bay and Sentosa/Keppel Bay, which likely indicates that more tenants are willing to pay for choice units in the central region albeit the average rentals are still dropping across the board in this segment.

 

The average rentals in the newer T.O.P. (less than two years) condos in the outskirts MRT locations are however picking up slightly and more tenants are again willing to pay premium for choice units in these developments.  This likely suggest that after the 1st initial low rents in these new condos, the owners are now getting improvements on their rental yield.

Compare All Latest Rates 2018

 

In an environment where rentals are not expected to pick up in a big way even with improving sentiments in the property market, it is ever more so imperative for owners to manage their mortgage costs in order to increase their overall returns on real estate investment.  To this end, it makes perfect sense to work with a trusted mortgage consultant partner who can prompt you whenever there is an attractive package from the banks. If you have yet to work with one, speak to us today.

 

And those who are looking to buy soon should contact us now to enjoy the special all-in private purchase legal fee of $1,800 (includes mortgage stamp duty and GST) – a privilege reserved for MortgageWise clients.

 

At MortgageWise, we seek to provide thought leadership in the area of mortgage planning in Singapore, taking deep dive into developments and news on mortgages & helping clients track interest rate movements.  We do not just go for one-time business with clients but rather choose to build long trusting relationships by giving truly independent advice to the extent of losing the deal.  We strive to become the first-choice mortgage partner for homeowners and the creditable distributor of mortgage products for banks and financial institutions in Singapore.

 

Compare All Latest Rates 2018

 

 

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Fed Starts Unwinding

The latest US Fed’s September FOMC unfolded just as the market expected with little surprises –  funds rate held steady in the range of 1% to 1.25% and unwinding of the massive US$4.5t QE asset purchase program announced earlier to start in October next month.  Perhaps the only unexpected move to some is that the Fed also signaled that the third and final rate hike for 2017 is still on track for December FOMC.

 

The Fed also made adjustments to some of their earlier forecasts, notably:

  • Maintained three hikes in 2018 but adjusted down the no of rate hikes from three to two for 2019, and just one hike for 2020.
  • Correspondingly revised down their longer term “neutral” Fed funds rate from 3% to 2.75%, in recognition of the persistently-low inflation.
  • Lowered their inflation forecast from 1.7% to 1.5% for this year and that for next year 2018 from 2% to 1.9%.

 

Compare All Latest Rates 2018

 

Notwithstanding the impact of recent hurricanes which effect is expected to be short-lived, the Fed revised upwards the 2017 full-year GDP growth from 2% to 2.4% but conceded that the stubbornly-low inflation is a big mystery even for the Fed as they stumble on finding the root cause.  While Yellen largely put the blame on declining cell phone charges in US which is temporary, the Fed cannot rule out possibility of other more structural causes like global competition or that coming from online stores.  It has maintained the need to monitor inflation and wage growth figures closely and adjust its monetary policy in response.  Overall with 11 out of 16 Fed officials holding on to one more rate hike in December, the underlying tone from Fed is that they still believe low unemployment will eventually lead to a rise in inflation.

 

The much-anticipated balance sheet unwinding program as announced earlier would start off next month with Fed opting not to reinvest the sales proceeds from bonds that mature monthly at the pace of US$10b per month initially, but gradually increasing this cap to US$50b per month within 12 months. This has the effect of taking away demand for Treasury bonds and mortgage-backed securities, creating a void where the private sector may not be able to fill, and hence put upward pressure on the long end of the curve.

 

 

After the Fed’s statement, the benchmark US 10-year Treasury note yields shot up to 2.29%.  This is one of the key indicator we watch over here, along with inflation figures in US, in order to ascertain the direction of 3-month SIBOR in Singapore, the benchmark interest rate here.

 

We are still on track with our own forecast on SIBOR last revised in June – when we raised the number of rate hikes we anticipate this year from two to three, but lowered where we see 3-month SIBOR ending the year from 1.50% to a range of between 1.25% to 1.30%.  It has creeped up quietly in July from 1% to the current 1.12% level.  For SIBOR to creep up further we need to watch for direction on US 10-year yields and the strength of dollar against Sing.  For now, we are maintaining our forecast on SIBOR.

Compare All Latest Rates 2018

 

If we are indeed proven right in our forecast where SIBOR end at its highest level in recent years, the current regime of low fixed rates will end the moment it starts moving again, possibly by next month.  We urge all homeowners to take advantage of the current price wars in fixed rate mortgages before it ends.  With low inflation globally, we do not expect interest rate to rise up in past cycles at 1% per annum.  Still, it is not inconceivable to expect prevailing floating rates to rise up from the current 1.50% to slightly above 2% within a year. If one is able to lock down a 3-year fixed rate at sub-2% (currently 1.58-1.68%), that 50 basis points savings translates into $3,500 a year or $10,000 savings over a 3-year period on a typical loan of $700,000 for example.

 

So, make that move quickly and you could jolly well reward your family with a nice family holiday to Europe during the December holidays.  Speak to our consultants today!

 

At MortgageWise, we seek to provide thought leadership in the area of mortgage planning in Singapore, taking deep dive into developments and news on mortgages & helping clients track interest rate movements.  We do not just go for one-time business with clients but rather choose to build long trusting relationships by giving truly independent advice to the extent of losing the deal.  We strive to become the first-choice mortgage partner for homeowners and the creditable distributor of mortgage products for banks and financial institutions in Singapore.

 

Compare All Latest Rates 2018

 

 

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singapore property aspen heights

Property Market 1H 2017

At MortgageWise, we try to provide our property investor clients with a snapshot of the performance of Singapore residential property market regularly through our own basket of condos which will provide supplementary insights in a more meaningful and personal manner than just a broad-based index from URA. Properties are not created equal and some will rise or fall more than the rest.

Compare All Latest Rates 2018

 

The condos selected in the basket are deemed iconic enough to be representative of prices in a particular precinct that is smaller than a whole central region or outside central region as defined by URA.  For areas outside central region we also tend to pick condos either right at or nearest MRT stations as these tend to be well sought after by investors.  Our basket would allow property investors to see the actual variation in prices over time for a particular group of condos that are fairly well-known in Singapore.  However our illustration is nothing more than simple averages of all transactions done over 6-month periods and in cases where there are less than 5 transactions (marked with an asterisk) do take the reading with a pinch of salt.  We also highlight the highest psf achieved in the period.

So now let us take a look at our basket of condos and their performance in the 1st half period of 2017.  The double-digit percentage change in psf prices are highlighted for you in blue (rise) and red (fall).

singapore property market

 

And what a first half it has been for 2017 which has seen quite a remarkable turnaround since we last did this comparison back in Feb.  Noticed all the “red alerts” which signify drops of more than 10% have largely disappeared with buyers pushing up prices of both the average psf transacted and highest psf attained in the 6-month period.

In the prime district of Orchard and River Valley, with the exception of Orchard Residences, transacted prices have largely risen and in fact we see huge increase in the volume of transactions at Ardmore Park the most liquid indicator of luxury properties in Singapore.  Total no. of units that changed hands at Ardmore Park in 1st half of 2017 doubled from 4 in the previous 6-month to now 9.  When volume goes up which means more buyers in the market, it will soon translate into higher prices which is why you see prices at Ardmore Park and Rivergate moving up strongly.  In particular, the highest psf clocked by Rivergate reaches almost its last high of $2400psf, quite a feat in such a short period with total 16 units changing hands.

Compare All Latest Rates 2018

 

Elsewhere, One-North Residences and Bedok Residences have the best performance in 2017 so far with near double-digit increases in both average psf transacted and highest psf attained in the period.  The average psf transacted is a better indicator of trend especially when there is sufficient transaction volume in the period.  We do see across the board increase in transaction volume across all segments of luxury, mid-tier, and mass market.  In the mid-tier segment of city-fringe properties, prices have stabilized. D’Leedon seems to be the outlier here with more than 20% drop in average psf prices but that might be transient with developer clearing their stocks fast through lowering prices and deferred payment or “stay-first” scheme. With more buyers expected to enter the market especially when economy picks up further in 2018, more condos might sell out soon.

Mass market properties have generally picked up as well with the exception of The Centris in our basket.  Weakness of the rental market probably affected this segment the most which could be the reason behind the performane of Centris.  We are quite curious to see the resale performance of J-Gateway, being our indicator for 2nd CBD of Jurong Lake District.  It obtained TOP not too long ago with rental statistics out for 1st half 2017 but so far there has been no resale transactions.

Overall the residential property market in Singapore has come alive since the start of the year and this is reflected quite accurately in our own MortgageWise’s basket of condos.  We hope this basket will give a more “ground-level” picture to supplement your reading of the property market through indices and data just released by the authorities.

If you are looking to buy or enter the market soon, we have a new exciting Legal Fee Privilege where you pay only $1800 instead of the usual $2500 or more when you take your loan through MortgageWise.  Speak to our consultants today who can share with you more and also advise you on the latest and best home loan packages before rates start moving up further once US Fed commences the trimming down of its US$4.5 trillion balance sheet expected from September onwards.

 

At MortgageWise, we seek to provide thought leadership in the area of mortgage planning in Singapore, taking deep dive into developments and news on mortgages & helping clients track interest rate movements.  We do not just go for one-time business with clients but rather choose to build long trusting relationships by giving truly independent advice to the extent of losing the deal.  We strive to become the first-choice mortgage partner for homeowners and the creditable distributor of mortgage products for banks and financial institutions in Singapore.

 

Compare All Latest Rates 2018

 

 

 

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Singapore property Rivergate

Singapore Residential Rental Market 2017 Q1

At MortgageWise, we aim to provide our property investor clients with a snapshot of the performance of Singapore residential rental market regularly through our own basket of condos which provides more meaningful and personal insights than just a broad-based index from URA. Properties are not created equal and some will rise or fall more than the rest.

Compare All Latest Rates 2018

 

The condos selected in the basket are deemed iconic enough to be representative of prices in a particular precinct that is smaller than a whole central region or outside central region as defined by URA.  For areas outside central region we pick condos either right at or nearest MRT stations as these tend to be well sought after by investors. Our basket would allow property investors to see the actual variation in prices over time for a group of fairly well-known and popular condos in Singapore. However our illustration is nothing more than simple averages of all transactions done over 6-month periods (all data from URA) so do take the reading with a pinch of salt.  We also highlight the highest rental achieved in the period.

We will look at the average rentals and highest rent achieved for last 6-month period (Oct 2016 to Mar 2017) and contrast that with the previous 6-month period (Apr 2016 to Sep 2016). We will highlight double-digit percentage change (above 10%) for you in blue (increase) and red (decline).

Singapore rental market 2017 Q1

Average rentals are still falling across the board with the exception of One-North Residences which bucked the trend but only slightly. We highlight the 4 condos with the biggest drop of more than 10% in average rents in the most recent 6-month period over the previous 6-month: Orchard Residences (4-bed), Cote D’Azur (4-bed), The Centris (3-bed), Sky Habitat (2-bed).

Compare All Latest Rates 2018

 

Average rentals over the period tells us more than the mode, or the highest rent achieved in the period. If one takes a closer look at the broad-based decline in both absolute and percentage terms, there are some noteworthy observations which might not be all that surprising to most of us:

  • Rents in most regions are still dropping but it seems outskirt areas are under more pressure than central region. The supply glut of recent years is in the outskirts or mass market. The problem is accentuated by the fact that in a down market, tenants tend to move back closer to town.
  • Rents in CBD seem to be holding up quite well as it registers the lowest absolute fall. This is also supported by the limited supply of new units in CBD.
  • Almost across the board, rents for bigger units (3 and 4-bedder) drop more than 1 and 2-bedders. This is the same be it in the luxury segment (Orchard Residences), high-end segment (Sky Habitat), or mass market (The Centris).

The supply overhang situation is unlikely to see significant improvement in the short term and property investors need to take heed and do their homework carefully before rushing out to place cheques at new launches, notwithstanding the pickup in market activities since the start of the year. One must have the “holding power” where we hope in three to five years’ time global economic growth would pick up and Singapore will once again be at the epicenter of the 600m ASEAN market and MNCs would start to invest again in the region.

Property investment is still one of safest asset class provided one does not sell out prematurely due to financial situations. Careful financial planning is required and to this end, it makes perfect sense to have a trusted mortgage consultant partner who can help lower your cost of funding over time, and not just one-off at the point of purchase. Speak to us today.

 

At MortgageWise, we seek to provide thought leadership in the area of mortgage planning in Singapore, taking deep dive into developments and news on mortgages & helping clients track interest rate movements.  We do not just go for one-time business with clients but rather choose to build long trusting relationships by giving truly independent advice to the extent of losing the deal.  We strive to become the first-choice mortgage partner for homeowners and the creditable distributor of mortgage products for banks and financial institutions in Singapore.

 

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TDSR changes - property market

TDSR Removed?

Don’t get too excited yet like the stock market, it’s only applicable to those who take an equity term loan of not more than 50% of the current property valuation.  In the same breadth, the three government ministries (MND, MOF and MAS) also announced today some tweaking on the SSD (Seller’s Stamp Duty) from 4 years down to 3 and a reduction of the duties by 4%.  The market is just over-reacting to the sudden news.  And the measures are forward-looking, not back-dated.  It has minimal impact in our view.

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The joint-press release can be found on the ministry’s and here we reproduce the Annex provided within the press release which captures the key changes on SSD:

This is a typical case of “you hear what you want to hear”.  The market and the industry players have been lobbying for several years now for removal or relaxation on some of the “cooling measures” and any slightest move by the government is suddenly taken out of proportion – a knee-jerk response if you like.

In our view, the impact on the latest moves is likely minimal to the market as a whole.  There are really three announcements which the market only got carried away with the first two:

1. Removal Of TDSR For Equity Term Loan Where Loan-To-Value Is Less Than 50%

What is equity term loan (ETL)?  This is strictly not at purchase, but refers to the additional loan that is taken out against the property valuation on the part which has been fully paid for over the years.  And there is a condition – the equity loan portion does not comprise more than 50% of the loan-to-value (LTV).

It is still unclear how the banks will apply this exemption – is it only the equity portion of the loan not to be above 50%?  Or in cases where there is still a housing loan outstanding, for the total housing and the new equity term loan combined not to be over 50%?  From the wordings per se, it seems to suggest the former.

The likely beneficiaries are retirees, which the authorities have indicated as the primary motivation for the change – to help them monetize one of their biggest assets at old age where there is no more or insufficient income to justify for a term loan or even to refinance.  What this means is that those homeowners who have bought properties from a long time ago where the loan has been fully paid down or where there is very little outstanding mortgage, can now look at gearing up for a term loan without the need to show income.

However we think lenders, in particular, credit departments, after being conditioned by TDSR applications since 2013 would most likely remain cautious and might still like to see some income.  Also remember that term loan essentially carry a higher risk to the lender as a 5th charge loan, hence how much of this becoming a benefit to retirees or anyone seeking ETLs with less than 50% LTV, is contingent on how the lenders implement the measures.  And from our experience it would take 3-6 months before we know that.

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2. Tweaking Of Seller’s Stamp Duty

This is positive news for the property market but does not bring about any substantial change as speculative froth has been by and large removed with the last hike on SSD to the current 16% down to 4% since Jan 2011.  No one buys a property now to “flip over” for a profit immediately or in a short time frame.  This reduction of the holding period from 4 years back to 3 years (SSD started in Aug 2010 with 3-year holding period with a tax of 3% down to 1% if one sells within the first year to the end of 3rd year respectively) will not change the mindset.  And the slight reduction of 4% across the respective 3 years holding period will not matter much as well except forced sales where the financial loss will be reduced.

There is also another factor that makes this move a non-event.  It is not across-the-board (or back-dated) but applies only to those who purchase a residential property on and after 11 March 2017.  What this means is that after today, anyone who buys a property could look at selling it with no SSD payable after a holding period of 3 years instead of 4.  The majority of sellers out there who bought their property from 2013 to 2016 would still not be able to sell until they meet the 4-year minimum period in order not to attract SSD.

However one good news is you will likely see more transactions in TOP properties from property launches henceforth as the holding period coincides with the typical 3-year construction period, especially for those who buy at the launch.  The segment of buyers who still believe in price inflation on TOP might want to take advantage of current property market weakness to buy at launches especially when the product is priced correctly.

3. Closing of Loophole For Those Buying Using PHE

We have already explained why the first two measures announced will likely see minimal impact.  What is more interesting to us is the third announcement on how the government will now apply the same taxation rules on ABSD (Additional Buyer’s Stamp Duty), SSD, etc to transactions involving PHE (property-holding entities), essentially closing the loophole for those using property-holding companies to transfer properties, usually the wealthy and those in the property business like developers. A new stamp duty called ACD (Additional Conveyance Duty) will be introduced for this purpose which will be levied on significant owners of equity in both the selling and buying PHEs for such transactions.  More details will be announced.

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Again the impact here is likely restricted to a small group as not many could afford to buy using private limited vehicles which could only get 20% financing for residential property purchase and which also attract the same 15% ABSD  like foreigners.

There is impact though on those already holding such assets in a corporate entity prior to all the rule changes of the past years as they can no longer just sell the assets from company A to company B and pay only 0.2% stamp duty.  It will be interesting to watch how this affects market pricing (if any) especially for those in the property business.

On the whole, we think the announcements today will have minimal impact on the property market.  And TDSR is here to stay.  It is a structural move which the government has re-iterated over the years and will never be removed.  The more significant impact will come only from changes to ABSD or a raising of TDSR threshold currently at 60%.

 

At MortgageWise, we seek to provide thought leadership in the area of mortgage planning in Singapore, taking deep dive into developments and news on mortgages & helping clients track interest rate movements.  We do not just go for one-time business with clients but rather choose to build long trusting relationships by giving truly independent advice to the extent of losing the deal.  We strive to become the first-choice mortgage partner for homeowners and the creditable distributor of mortgage products for banks and financial institutions in Singapore.

 

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Singapore Properties

Property Market In 2016

At MortgageWise, we try to provide our property investor clients with a snapshot of the performance of Singapore residential property market regularly through our own basket of condos which will provide supplementary insights in a more meaningful and personal manner than just a broad-based index from URA. Properties are not created equal and some will rise or fall more than the rest.

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The condos selected in the basket are deemed iconic enough to be representative of prices in a particular precinct that is smaller than a whole central region or outside central region as defined by URA.  For areas outside central region we also tend to pick condos either right at or nearest MRT stations as these tend to be well sought after by investors.  Our basket would allow property investors to see the actual variation in prices over time for a particular group of condos that are fairly well-known in Singapore.  However our illustration is nothing more than simple averages of all transactions done over 6-month periods and in cases where there are less than 5 transactions (marked with an asterisk) do take the reading with a pinch of salt.  We also highlight the highest psf achieved in the period.

So now let us take a look at our basket of condos and their performance in the 2nd half period of 2016.  The double-digit percentage change in psf prices are highlighted for you in blue (rise) and red (fall).

singapore property market 2H 2016

Based on our basket it does seem prices are still falling but by a smaller margin in general across the board which is in line wih URA index.  In fact we see some rebound in average psf transacted at selected condos most noticeably Marina Bay Suites and Soleil.  Ardmore Park, still regarded as the benchmark for luxury condo in Singapore with big land and sizeable units, also rebounded by 3.1%.  There are generally more buyers in luxury ssector in 2016 helped by Indonesians snapping up real estate before a tax indemnity deadline.

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Condos that tend to “out-perform or under-perform” in sale psf prices are captured in our tracking of highest psf clocked in the period.  Do take note for out-perform these tend to be the 1-room or smaller units in condos where there are various sizes and for under-perform these tend to be units with huge private excess space (PES) like penthouses or patio units.  With this in mind, one stand-out condo is once again Ardmore Park registering a 12.7% increase with highest psf transacted at $3,321 psf.  Marina Bay Suites has only 1 single transaction which render the reading inconclusive.  At the lower end of the scale you see continued weakness in the prices of Sentosa Cove condos with The Oceanfront registering a 10% decline in terms of highest recorded sale price.

In the mass market segment, it is hard for us to draw conclusions due to our small sample size.  We do note across the board the average done prices are still falling, not surprising with the huge supply overhang we read about so often.  Bedok Residences, a condo that is situated right at MRT/Mall, recorded the biggest fall of 10% in average psf sale prices.  We expect mass market condo prices to face significant pressure from new launches and sellers eager to offload due to falling rental yields and high vacancy rates.

 

At MortgageWise, we seek to provide thought leadership in the area of mortgage planning in Singapore, taking deep dive into developments and news on mortgages & helping clients track interest rate movements.  We do not just go for one-time business with clients but rather choose to build long trusting relationships by giving truly independent advice to the extent of losing the deal.  We strive to become the first-choice mortgage partner for homeowners and the creditable distributor of mortgage products for banks and financial institutions in Singapore.

 

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