by Tan Kok Keong
05:55 AM Jan 28, 2011

The Government's move to introduce a new set of property market cooling measures two weeks ago was widely anticipated but the harshness of the measures surprised many.

The initial reaction from buyers was mixed. On the weekend immediately after the Jan 14 measures, buyers at Spottiswoode 18 snapped up 170 out of the 251 units launched, surprising many observers. The nonchalant reaction could be because the cooling measures were already a known market risk. These buyers had already overcome their reservations during the pre-launch marketing period and were primed and ready to buy.

This was somewhat similar to the good response to the launch of NV Residences after the earlier round of cooling measures on Aug 30 last year.

In contrast, over the same weekend after the Jan 14 measures, sales cooled in Austville Residences - an executive condominium project - despite earlier reports of potential buyers queueing overnight.

Beyond these anecdotal examples, we collaborated with the research team at leading real estate portal PropertyGuru.com to get a clearer picture of pre-transaction activities.

The number of visitor sessions to the website fell 10.7 per cent in the week after the measures compared with the week before. Comparatively, visitor sessions only fell by 3.5 per cent following the Aug 30, 2010 measures. Visitors searching for resale HDB flats saw the sharpest decline (Chart 1A and 1B). In addition, the number of new listings fell by 6 per cent, while the number of listings rose 2 per cent following the Aug 30 measures.

While there are many other factors that affect the visitor numbers, the comparison gives us a clearer picture of market activity following the measures.

The statistics above reinforce the consensus view that overall marketing activity has fallen. If this persists, transaction volumes will decline. Based on historical analysis, a drop in total sales volume over four quarters tends to lead to a fall in the overall Urban Redevelopment Authority's private residential price index thereafter. This happened at two most recent turning points for prices - in Q2 '00 and Q2 '08. The question remains as to whether the current market cooling measures would lead to a persistent fall in volume and thus prices.

To answer this, an analysis of events after the May 1996 market cooling measures could be a good gauge, as that was the last time when a similarly harsh set of measures was introduced.

Within a year from May 1996, overall private home prices fell 8.9 per cent. While there can be no doubt that market cooling measures played an important role, a closer look suggests that other factors could have contributed to the plunge in prices.

Firstly, the rental market weakened over the same period. Overall occupancy rate fell from 93.8 per cent in Q2 '96 to 91.7 per cent in Q2 '97 due to an increase in the number of units completed. As a result, rents also fell by 9.9 per cent over the same period. In addition, interbank three-month Sibor rose slightly to 5.94 per cent from 5.75 per cent over that period. Buying property for investment became less appealing.

Secondly, the stock market also began to decline over the same period. The benchmark Straits Times Index fell 13.4 per cent within a year from June 1996. To add to the woes, the Asian Financial Crisis started in mid-1997. The loss in wealth in the stock market probably motivated investors to sell assets, which could be another important factor that precipitated the continued fall in property prices.

The above analysis shows that for the current set of market cooling measures to cause another prolonged period of price decline, other conditions need to fall in place. This could come in the form of a decline in the stock market or the business environment, higher unemployment and a deterioration of property market basics. The lack of "wealth destructive" factors was the key reason for the ineffectiveness of the last two rounds of market cooling measures, in my opinion.

Going into the new year, the wealth creation effect appears to be largely on track. According to various equity strategists, the Singapore stock market is expected to perform well this year, on the basis that forward price-to-earnings ratios are still undemanding compared with previous peaks. Business prospects look more promising and employers are planning to expand hiring and increase wages and bonuses.

For the property market, the occupancy rate looks like it could remain above historical average of 92 per cent as completions in 2011 are expected to reach only 6,722 units - below the historical average, according to Urban Redevelopment Authority numbers.

Meanwhile, the prospect for a sharp increase in interest rate appears to be muted. Taken together, this suggests that the slowdown in transaction activity and price growth might again turn out to be temporary. Ironically, if that is the case, we should expect more market cooling measures, which will remain as a market risk in 2011. But by themselves, the measures may not be enough to turn sentiment.

In conclusion, while I expect the market to face immediate downward pressure on volume and prices, the year-on-year price fall in 2011 could be marginal. In the meantime, people interested in properties should keep watch for any of the "wealth destruction" catalysts, which in some instances can fall into place very fast.

Buyers should also note the potential for a weaker rental market from next year due to the large number of housing units to be completed from then onwards. Buyers who are stretching their last dollar to buy their dream home might want to dream less and work their numbers based on more prudent assumptions and exit strategies.



Tan Kok Keong is Head of Research and Consultancy at Orange Tee.


Source: www.todayonline.com

Published January 19, 2011

Small units a big hit at Spottiswoode 18

By UMA SHANKARI

(SINGAPORE) Around 170 units in Roxy-Pacific Holdings' 251-unit Spottiswoode 18 were snapped up at the project's launch yesterday at an average price of $1,900 per square foot (psf) - catching many market watchers by surprise.

The project's mostly small units proved to be popular with investors. Most apartments on offer at Spottiswoode 18 - 150 out of the 251 units - are just 387 sq ft. Apartments at the project go up to 1,324 sq ft in size.

There was also balloting for a handful of units as more than one buyer was keen on them.

The group initially wanted to sell only around 100 units but released all choice units due to the strong response, said Roxy-Pacific chief executive Teo Hong Lim. But he added that last week's government measures to cool the market have had some impact on sentiment as not many units were contested for.

Roxy-Pacific's news comes a day after Oxley Holdings said it has sold 22 out of the 36 residential units at its newly-launched Vibes@Kovan over the weekend.

Apartments at Vibes@Kovan are also small - the 22 apartments range in size from 377 square feet to 1,001 sq ft. They were sold for an average selling price of $1,255 psf.

The deals surprised industry players. Said one industry veteran: 'The thinking now is that small units are mostly sought after by speculators, which is the segment that the government targeted with its measures. So it's surprising that these projects are still selling so quickly.'

But United Engineers reported that sales of its 540-unit executive condominium project Austville Residences were slower as a result of the latest curbs. The developer has sold about 20 per cent of units since its first sales day on Jan 13 - the same day the government unveiled new measures.

'Our sales are affected by the government's announcement on the new set of cooling measures. We are observing a dip in buying interest as most home buyers are still trying to digest the changes introduced to the property market,' said a spokesman for the group.

The morning of the first day of sales saw a high number of visitors and brisk transactions, but the enthusiastic demand was subsequently quelled by the government's announcement later in the day, the spokesman added. But the group is still positive that sales will pick up soon. Units at the project are selling at an average price of $680 psf and the deferred payment scheme is being offered to buyers.

Austville Residences implemented a 'first-come, first-served' system to allocate its 540 units. It was initially well received by the market, with more than 100 successful applicants forming an overnight queue outside its showflat a day before the first sales day.


Source:www.businesstimes.com.sg

by Joanne Chan

Updated 11:20 AM Jan 14, 2011

SINGAPORE - Executive condominiums continue to see strong demand from home buyers who have been shut out of the public housing market until recently.

Austville Residences in Sengkang, the latest development for sale and the fourth EC to have been launched after a five-year hiatus, had a queue of some 150 home buyers and their families forming even before doors opened for booking yesterday morning.

One reason: A first-come-first-served system to allocate the 540 units, unlike the previous three ECs, which used balloting.

Early birds arrived on Wednesday and waited overnight to get a shot at choice units. Some came prepared with mats and chairs, others simply stood in line. By 9am, the line had snaked past the showroom.

The first couple in line, who declined to be interviewed, said they arrived at 3pm on Wednesday.

Mr Levan Heng, who arrived three hours later and was seventh in line, said he was attracted to Austville because his parents and in-laws live nearby.

"I've already applied for a Build-To-Order flat and I've in fact paid some money - like $2,000. But I was thinking I might even forfeit that to get this," he said.

Property developer United Engineers said it decided on a first-come-first-served system because balloting left too much to chance for genuine buyers. It declined to disclose first-day sales numbers.

Project director Chua Kien Pin said: "We have keen buyers who have aspirations for, maybe, a unit on a high storey or good spacing. They're not really well taken care of in a balloting system. In a queue system, buyers can come early and get what they want."

Market watchers were not surprised by the queue for Austville, whose units are priced at $680 per sq ft on average.

Dennis Wee Group director Chris Koh said: "There's quite a group of people who can't afford private property, but then their salary is above $8,000, so they can't buy Housing and Development Board flats either."

He added that Austville has good attributes, such as proximity to the Light Rail Transit and a shopping centre.

With ECs available to households with a maximum income of $10,000, Mr Koh said: "You can say it's a long route to owning a private property. If you aspire to own a private property today but can't afford one, perhaps choose an EC and, in the years to come, when it gets privatised, you benefit."

Since ECs were relaunched, sales have been good. Esparina, which was launched in October, has seen a 92-per-cent take-up rate for its 573 units.

For the Canopy, rolled out in the same month, this figure stands at almost 60 per cent, while Prive in Punggol, which was launched last month, has reached its 75-per-cent mark.

Three EC sites in Choa Chu Kang, Tampines and Punggol will be up for tender in the first half of this year under the Government's Land Sale Programme.

Source: www.todayonline.com

Published December 11, 2010

Over a third of Punggol's Prive snapped up
Other projects that are coming to market include Austville Residences, Spottiswoode 18 and Killiney 118

By EMILYN YAP

CHRISTMAS came early for NTUC Choice Homes Co-operative and Chip Eng Seng yesterday as home buyers inked deals for more than a third of the 680 apartments at their executive condominium project, Prive.

As at 5pm, the developers had processed over 270 sales options and said that they were clearing more. They declined to give an estimate of the total number of units that could be sold.

Balloting for units at the 99-year leasehold Prive at Punggol began yesterday. As many as 1,036 applications had poured in by the end of Tuesday, reflecting strong interest for the project.

Prive is the first EC to come up in Punggol and the developers had said earlier that the average selling price of units would be between $660 per square foot and $690 psf. Buyers can opt for a deferred payment scheme, but they will have to pay 2 per cent more.

Another EC launch will be coming up soon. United Engineers could be rolling out Austville Residences between Sengkang East Avenue and Buangkok Drive either this month or next.

BT understands that the selling price might start from $620 psf. The developer is planning to give out branded fridges to early buyers and hold a lucky draw with return air tickets to Australia as prizes.

Some agents are gathering interest for the freehold Spottiswoode 18, which will come up on the site of the former Dragon Mansion near Tanjong Pagar.

Roxy-Pacific Holdings had bought Dragon Mansion en bloc late last year. There are plans to build a 36-storey residential tower on the site, with 251 apartments measuring 387 square feet to 1,324 sq ft. Prices are said to be above $2,000 psf.

Spottiswoode 18 will be near UOL Group's recently launched Spottiswoode Residences, which is also a freehold project. Selling prices at the latter were last reported to be in the range of $1,720-2,270 psf.

Marketing for the freehold Killiney 118 has also started. The project in the Somerset area has 30 units comprising one and two-bedders and is developed by a unit of Amara Holdings.

The momentum for property launches could pick up in January after the December holiday season ends and before the Chinese New Year kicks in. For instance, CB Richard Ellis is in discussions for four to five launches slated for that month.


Source: www.businesstimes.com.sg